Module $1$ Practice Quiz $1$

Practice Quiz. $30$ min. $4$ total points available$\mathrm{.}4$ total points

$1.$

Question $1$

A merger was announced today in the financial press. According to financial analysts and investors, this merger will add significant value to the acquirer. What should happen to the acquirer's stock price in the first day after the merger announcement?

$1$ point

Nothing, the stock price is determined by future dividends and should not be affected by investors' reaction to a merger.

It should go down since announcement returns are typically negative for acquirers.

It should go up since investors believe the merger will increase company value.

Nothing since the merger has not yet happened.