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Merger

?

If an acquisition does not create value, then the:

earnings per share of the acquiring firm must be the same both before and after the acquisition.
earnings per share can change but the stock price of the acquiring firm should remain constant.
price per share of the acquiring firm should increase because of the growth of the firm.
earnings per share will most likely increase while the price-earnings ratio remains constant.

Correct - Your answer is correct.

Wrong - Your answer is wrong.

Detailed Answer

Correct answer: (B)
earnings per share can change but the stock price of the acquiring firm should remain constant.

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