Series 79 practice questioneasyAccretion and Dilution Analysis
An acquisition is accretive when it does what?
- AReduces enterprise value below equity value
- BCreates appraisal rights for all shareholders
- CIncreases the acquirer’s earnings per share relative to standalone EPS✓ Correct answer
- DCauses antitrust agencies to clear the merger
Explanation
Why C — Increases the acquirer’s earnings per share relative to standalone EPS
Increases the acquirer’s earnings per share relative to standalone EPS Accretion refers specifically to EPS impact on the buyer versus its standalone earnings. A deal can be strategically attractive even if it is dilutive in the near term, but the concept itself is about EPS.
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