The Portfolio Effect After a Merger Should Provide the Firm

question 83

Multiple Choice

The portfolio effect after a merger should provide the firm with risk reduction benefits that result in:

• A) the expected value of earnings per share may increase as a result of the merger,the standard deviation of possible outcomes may increase as a result of risk reduction through diversification.
• B) the expected value of earnings per share may remain relatively constant as a result of the merger,the standard deviation of possible outcomes may increase as a result of risk reduction through diversification.
• C) the expected value of earnings per share may decline as a result of the merger,the standard deviation of possible outcomes may decline as a result of risk reduction through diversification.
• D) the expected value of earnings per share may remain relatively constant as a result of the merger,the standard deviation of possible outcomes may decline as a result of risk reduction through diversification.

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Definitions:

Self-Conceptual Coherence

The degree to which an individual's self-concept is clear, consistent, and orderly, allowing for a stable perception of the self.

Schizophrenic

A mental disorder characterized by distortions in thinking, perception, emotions, language, sense of self, and behavior.

Perspective

Perspective refers to a particular attitude towards or way of regarding something; a point of view.

Relational Self

This concept reflects how aspects of one's self-identity are shaped by relationships and social interactions with significant others.