Which of the Following Statements Is Most CORRECT

question 25

Multiple Choice

Which of the following statements is most CORRECT?

• A) Tax considerations often play a part in mergers.If one firm has excess cash,purchasing another firm exposes the purchasing firm to additional taxes.Thus,firms with excess cash rarely undertake mergers.
• B) The smaller the synergistic benefits of a particular merger,the greater the scope for striking a bargain in negotiations,and the higher the probability that the merger will be completed.
• C) Since mergers are frequently financed by debt rather than equity,a lower cost of debt or a greater debt capacity are rarely relevant considerations when considering a merger.
• D) Managers who purchase other firms often assert that the new combined firm will enjoy benefits from diversification,including more stable earnings.However,since shareholders are free to diversify their own holdings,and at what's probably a lower cost,research of U.S.firms suggests that in most cases,diversification through mergers does not increase the firm's value.
• E) Research of U.S.firms suggests that managers' personal motivations have had little,if any,impact on firms' decisions to merge.

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Definitions:

Performance

The act of performing or carrying out tasks and the efficiency or effectiveness with which these are executed.

Flash

A technology used in photography and devices to produce a brief burst of light, typically used to illuminate a scene.

NVRAM

Non-Volatile Random Access Memory, a type of memory that retains data after the system power is turned off.

SSDs

Solid State Drives are a type of data storage device that uses integrated circuit assemblies to store data, known for their fast read/write speeds and lack of moving parts.