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Old Co Was Acquired by Raptor for Cash, at a Significant

Question 48

Multiple Choice

Old Co. was acquired by Raptor for cash, at a significant premium to book value, on January 1, 2004. Since that time, the now wholly owned subsidiary has had modest growth and all of its earnings have been distributed to its parent. Some of Old's bonds remain publicly traded. Which of the following is most likely?


A) An increase in Old's total assets from 2003 to 2005.
B) An increase in Old's pre-tax income from 2003 to 2005.
C) An increase in Old's stockholders' equity from 2003 to 2005.
D) A Raptor guarantee of the bonds.

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