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In a stock swap merger, the ownership of the bidder will be diluted. TRUE FALSE Justify your choice The credit rating of the bonds issued
- In a stock swap merger, the ownership of the bidder will be diluted.
TRUE
FALSE
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- The credit rating of the bonds issued in an LBO is usually at investment grade because the targets are mainly high growth firms.
TRUE
FALSE
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- Empirical research consistently documents price drops on the announcement of equity raising. A generally accepted explanation is that managers may choose to sell more shares when market tend to undervalue the shares.
TRUE
FALSE
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- Under-investment occurs in a distressed firm where managers invest in highly risky projects (negativeNPV) at the cost of creditors in order to benefit shareholders.
TRUE
FALSE
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- It may not be optimal for an American call option holder to exercise the option early when there is an opportunity to earn a profit.
TRUE
FALSE
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