If the P/E paid is equal to the P/E of the acquiring company, the effect on the earnings per share of the acquired company will be
A) positive.
B) neutral.
C) negative.
D) uncorrelated.

Question

Quizplus · Accepted Answer

If the P/E paid is equal to the P/E of the acquiring company, the effect on the earnings per share of the acquired company will be neutral, as there is no change in the ratio of price to earnings.

If the P/E Paid Is Equal to the P/E of the Acquiring