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Exchange ratio in a stock-for-stock merger is most commonly fixed using:
ABook value per share of acquirer divided by target (within the standard regulatory framework)
BMarket price per share of target divided by acquirer market price (with adjustments)
CNumber of shares outstanding only
DReverse of dividend cover of target
Answer & Solution
Correct answer: B. Market price per share of target divided by acquirer market price (with adjustments)
1. Identify what the question asks: this concept maps to exchangeratio (§4.3).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (B).
_Source: ICAI BoS CA Final Paper 2, Ch 14 "Mergers Acquisitions and Corporate Restructuring"_
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