SkipE99 Wrote: ------------------------------------------------------- > c is right. > > > Which type of merger is most likely when the > motivation for merging is to bootstrap earnings > per share (EPS), and what does this imply about > the lifecycle stage of the acquirer and the > target? > > > A) Conglomerate and same stage. > B) Conglomerate and different stages. > C) Horizontal and different stages. Why is A the answer here??? I think its B. Your explanation states that the industries will be in different stages if im not mistaken. Thanks.
yeah. that was a typo. the answer should be B. Schweser Qbank changes the order/paring of the ABC options with the answers from the printable tests and when you look the question up by using its question ID number. when in doubt, look to the explanation provided. sorry about that. we were going fast earlier this afternoon
Re: the first finanical leverage, I think it does work using TA/E. If they buy assets by issuing stock then TA-up and equity-up by the same amount. If you increase the denominator by the same as the numerator, the ratio decreases (try it with TA/E before as 3/2 and then after increasing by 1 each to 4/3)
answer has to be B…analyst has assumed the liabilty which should not be assumed… actual leverage is lower than analyst’s projection actual cash flow would be higher because assumed liabilty would not have to be paid