ProblemsObservers believe that, following the takeover, the P/E ratio of Expansion plc will
be 20. It seems likely that Expansion plc will continue to distribute the same propor-
tion of its after-tax profits as in the most recent year.
Assuming that both sets of shareholders are concerned both with the level of divi-
dends and with the market price of their shares, how would the shareholders of each
business be likely to react to the takeover offer?There are sets of multiple-choice questionsand missing-word questionsavailable
on the website. These specifically cover the material contained in this chapter. These
can be attempted and graded (with feedback) online.
There is also an additional problem, with solution, that relates to the material
covered in this chapter.
Go to http://www.pearsoned.co.uk/atrillmclaneyand follow the links.‘