Which of the following statements best describes the average stock price reactions to mergers?
A)Both the target's and the acquirer's share prices increase slightly.
B)Both the target's and the acquirer's share prices increase substantially.
C)The target's share price increases substantially,while the acquirer's share price falls substantially.
D)The target's share price increases substantially,while the acquirer's share price increases only slightly.
E)The target's share price falls slightly,while the acquirer's share price increases substantially.

Question

Quizplus · Accepted Answer

Typically, in a merger, the target company's share price increases substantially due to the premium offered by the acquirer. The acquirer's share price might increase as well, but usually by a smaller margin, reflecting the costs and risks associated with the acquisition.

Which of the Following Statements Best Describes the Average Stock