Question
Firm A enters into a merger agreement with firm B whereby A will buy B and will pay for B with its own stock. Upon
Firm A enters into a merger agreement with firm B whereby A will buy B and will pay for B with its own stock. Upon announcement of the deal, Firm As stock price decreases by 5%. Based on this stock price reaction, Firm As CEO argues that the market must believe that the deal is a bad one for As shareholders. Is the CEOs reasoning correct? Please explain.
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Technical Analysis Of Stock Trends
Authors: Robert D. Edwards, John Magee, W.H.C. Bassetti
8th Edition
0814406807, 978-0814406809
