Which of the Following Is True of Mergers

question 32

Multiple Choice

Which of the following is true of mergers?

• A)​A new legal entity is established.
• B)​A target firm becomes a unit of the acquiring firm.
• C) ​Control of assets is turned over from one firm to its partner.
• D) ​Mergers are much more common than acquisitions.

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Definitions:

Secured Parties

Creditors who have the right to seize collateral if a debtor fails to fulfill their obligation under a secured agreement.

Unsecured Creditors

Creditors who have extended credit without the protection of collateral, making their claims on a debtor’s assets secondary to those of secured creditors.

Collateral

Property or assets pledged by a borrower to secure a loan or other credit, and subject to seizure on default.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a debt.