2 MCQ and 2 SQ for you. Argue your MCQ decisions please.

9) You are the CEO of a firm and have just launched a bid for another company at $40 a share. You are surprised to see the target’s price jump to $45 a share. Why is this? a. The market doesn’t expect you to buy the company b. The market expects a further offer c. The market thinks your offer is too low d. The market expects the target to buy you e. None of the above

10) Your bid in #9 fails, but your share prices rises ABOVE where it was previously trading. Why? 1 Mark a. The market was relieved you didn’t succeed b. You are now in play c. The market is rewarding you for trying to do something d. All of the above e. None of the above

Why does the price of the target usually rise less than the takeover premium?

Why do most firms pay a take-over premium?

thank you very much in advance.