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What makes an acquisition accretive to the acquirer's earnings per share?

  1. A The target is acquired at a lower effective cost than the acquirer's own earnings yield
  2. B The target is larger
  3. C The deal is all cash
  4. D Synergies are ignored
Answer

The target is acquired at a lower effective cost than the acquirer's own earnings yield

Broadly, if the acquirer's P/E exceeds the target's, an all-stock deal is accretive before considering synergies and financing costs.

All Investment Banking MCQs

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