Synergy Exists When

question 115

Multiple Choice

Synergy exists when:

• A) cost savings are realized through improved allocations of financial resources based on investments inside or outside the firm.
• B) two units create value by utilizing market power in their respective industries.
• C) firms utilize constrained related diversification to build an attractive portfolio of businesses.
• D) the value created by business units working together exceeds the value the units create when working independently.

---

Definitions:

Lessor

The individual or entity that rents or leases their property or asset to another person, referred to as the lessee.

Operating Leases

Operating leases are contractual agreements in which the lessee pays to use an asset for a short period relative to the asset's life, without assuming the risks and rewards of ownership.

Cancellable

Refers to an agreement or contract that can be terminated or annulled by the involved parties.

Lessor

The entity that rents out a property or asset to another entity, referred to as the lessee.