In December 2017, Parent Company started negotiating for the acquisition of Sub Company. The offer was for shareholders of Sub Company to receive one Parent Company share with a market value of P125 for every four shares held in exchange for all assets of Sub Company (except cash and shares in listed companies). In addition to the shares, Parent Company wil transfer its shares in listed companies which has a fair market value of P750,000. Parent Company wil also pay Sub Company sufficient cash to enable Sub Company to pay all its creditors then Sub will liquidate. The shareholders of Sub Company accepted the offer. Balance Sheet on December 31, 2017 is given below: Cash Accounts receivable Inventory Shares in listed company Land and bulilding - net Property, plant & equipment Accounts payable Mortgage loan Equity, Common stock, P50 par Retained earmings Parent 7,250,000 1,700,000 2,800,000 800,000 3,500,000 6,500,000 3,250,000 7,500,000 10,000,000 1,800,000 Sub 260,000 1,065.000 1,500,000 1,100,000 2,000,000 5.250.000 2,000,000 1,500,000 7,500,000 175,000 The net assets of Sub Company are reflected at their fair values except for the following: Inventory, P1,300,000 fair market value Land and building. P4,000,000 fair market value Shares in listed companies, P900,000 fair market value

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing t…