Under a fixed exchange ratio: a)The value of the transaction is fixed and is usually beneficial...

Under a fixed exchange ratio:

a)The value of the transaction is fixed and is usually beneficial to the buyer

b)The number of the shares issued by the acquirer is fixed and is usually beneficial to the buyer

c)The number of the shares issued by the acquirer is fixed and is usually beneficial to the seller

d)The value of the transaction is fixed and is usually beneficial to the seller

Solutions

Expert Solution

b.The number of the shares issued by acquired is fixed and is usually benefecial to the buyer.

Under fixed exchange ratio, the buyer specifies the number of shares to be issued per share of seller, for example, the buyer may specify that it issues 2 shares per 1 share of seller company.

This transaction seals the deal irrespective of any decrease in value of buying company's share value.

The selling company will receive the fixed number of shares from buying company.

Whereas, in floating exchange rate we have the number of shares issued to be adjusted for price of the buyer company share, so that the total value of shares issued does not change.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Under fixed exchange rates, excessive monetary growth leads to balance of payments problems. Under floating exchange...

Under fixed exchange rates, excessive monetary growth leads to balance of payments problems. Under floating exchange rates, it leads to a currency problem. Discuss these statements with reference to the monetary approach to the balance of payments.

Explain how exchange rates are determined under the fixed exchange rate system. Then, thoroughly discuss the...

Explain how exchange rates are determined under the fixed exchange rate system. Then, thoroughly discuss the advantages and disadvantages of the fixed exchange rate system.

Discuss the conditions under which fixed exchange may prove superior to flexible exchange rate. Be sure...

Discuss the conditions under which fixed exchange may prove superior to flexible exchange rate. Be sure to discuss the set of operations (and their difficulties) necessary to maintain a fixed exchange rate. 50 points

Suppose that Mexico has a fixed exchange rate regime, and value of peso is fixed against...

Suppose that Mexico has a fixed exchange rate regime, and value of peso is fixed against the dollar. If, everything else constant, Mexico starts growing slower than US, how should the Mexico monetary policy react to maintain the fixed exchange rate regime?

The effectiveness of monetary policy in influencing national income will, under a system of fixed exchange...

The effectiveness of monetary policy in influencing national income will, under a system of fixed exchange rates, be ________ under a system of flexible exchange rates. select one: a. greater than b. less than c. perhaps greater than, perhaps less than d. the same as

1. Under the fixed exchange regime, if the country begins with a surplus in its overall...

1. Under the fixed exchange regime, if the country begins with a surplus in its overall balance of payments, to maintain the fixed exchange rate, explain the following a) How does the central bank intervene through monetary policy to affect the balance of payment? b) How does the central bank intervene through fiscal policy to affect the balance of payment?

Suppose that under a fixed exchange rate system, a country starts at both internal and external...

Suppose that under a fixed exchange rate system, a country starts at both internal and external balance. What happens to the internal and external balance curves if investment spending falls in the rest of the world?

21) Under an international regime of fixed exchange rates, countries with a BOP ________ should consider...

21) Under an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency. A) deficit, revaluing; surplus, revaluing B) deficit, devaluing; surplus, devaluing C) surplus, devaluing; deficit, revaluing D) surplus, revaluing; deficit, devaluing 22) Use the following terms for this question: (X-M) = Current Account Balance (CI-CO) = Capital Account Balance (FI-FO) = Financial Account Balance (I-S) = Investment-Saving Balance FXB = Reserve...

9. “Under fixed exchange rates the monetary policy is impotent, but the fiscal policy is effective.”...

9. “Under fixed exchange rates the monetary policy is impotent, but the fiscal policy is effective.” Do you agree? Explain. 10. “Chronic budget deficits mean ever-accumulating, unsustainable public debt.” Do you agree? Explain why or why not. Make sure to address the following questions in your essay: a. What is the relationship between public deficits and debt? b. What is meant by “sustainable debt”? How do you know whether the public debt sustainable? c. How is it possible for chronic...

What are the general conditions under which a fixed exchange rate makes sense for a country?...

What are the general conditions under which a fixed exchange rate makes sense for a country? Finally evaluate the pros and Cons of using Pegged currency in UAE.

Subjects