Which of the Following Is Not a Common Shortcoming of a Merger

question 20

Multiple Choice

Which of the following is not a common shortcoming of a merger or acquisition?

• A)The acquiring firm pays a premium.
• B)Top managers of the acquired firm often depart the organization.
• C)Building a common culture after layoffs can be complicated.
• D)All of the above are common shortcomings.

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Definitions:

Moral Hazard

The situation where one party to a transaction can take risks without having to suffer consequences, often because another party bears the cost of those risks.

Mortgage Lender

A financial institution or individual that provides loans to borrowers for the purpose of purchasing real estate, with the property serving as collateral.

Careless Finances

The mismanagement or negligent handling of personal or corporate finances.

Moral Hazard

The risk that one party to a contract can change their behavior to the detriment of another party once the contract has been concluded.