Which One of the Following Statements Is Correct

question 109

Multiple Choice

Which one of the following statements is correct?

• A) A firm must realize some synergy as a result of a merger if the earnings per share of the acquiring firm increase.
• B) Any diversification achieved through a merger is valued by investors.
• C) Any increase in earnings per share due to a merger provides financial reasoning for an increase in the stock price per share.
• D) Firms with surplus cash need to justify an acquisition as having a business purpose other than the avoidance of a dividend distribution.
• E) Diversification is one of the greatest benefits derived from an acquisition.

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Definitions:

Limbic System

A complex system of nerves and networks in the brain, involving several areas near the edge of the cortex concerned with instinct and mood. It controls the basic emotions (fear, pleasure, anger) and drives (hunger, sex, dominance, care of offspring).

Amygdala

A small, almond-shaped cluster of nuclei located deep within the temporal lobes of the brain, involved in processing emotions such as fear and pleasure.

Soccer Player

An individual who participates in the sport of soccer, whether professionally or as an amateur, playing on a field team aiming to score goals.

Cerebellum

A region of the brain that plays a crucial role in motor control, and it may also be involved in some cognitive functions such as attention and language.