Firms that are acquired to take advantage of bootstrapping often have:
A) a lower price-earnings ratio than the acquirer.
B) a higher price-earnings ratio than the acquirer.
C) more outstanding shares than the acquirer.
D) a higher market valuation than the acquirer.

Question

Quizplus · Accepted Answer

Bootstrapping occurs when a firm with a higher price-earnings ratio acquires a firm with a lower price-earnings ratio to increase its own earnings per share.

Firms That Are Acquired to Take Advantage of Bootstrapping Often