Question

15. Individual Problems 2-5 Suppose Apple recently made a bid to acquire Netflix. As a result, the market value of Netflix rose. Furthermore, suppose the market value of Apple fell, but the decrease was smaller in magnitude than the rise in the market value of Netflix. What does this tell you about the value-creating potential of the deal? O The market thinks that combining these assets will neither create nor destroy value. The market thinks that combining these assets will create value. O The market thinks that combining these assets will destroy value.

Answer 1

As the fall in the value of Apple's shares are less than the rise in the share price of Netflix the market thinks that combining these assets will create a value.The answer is "B".