Which of the Following Statements Is Most CORRECT

question 9

Multiple Choice

Which of the following statements is most CORRECT?

• A) The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.
• B) Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the firm's capital structure, it will not affect its overall required rate of return.
• C) The basic rationale for any financial merger is synergy and, thus, the estimation of proforma cash flows is the single most important part of the analysis.
• D) In most mergers, the benefits of synergy and the premium the acquirer pays over the market price are summed and then divided equally between the shareholders of the acquiring and target firms.
• E) The primary rationale for most operating mergers is synergy.

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Definitions:

Cholangiography

A test that evaluates the function of the bile ducts by injection of a contrast medium directly into the common bile duct (during gallbladder surgery) or through a T-tube (after gallbladder surgery or during radiologic testing) and taking an X-ray.

Bile Ducts

Channels that carry bile from the liver and gallbladder to the duodenum for digestion.

Radiologist

A medical doctor specialized in diagnosing and treating diseases and injuries using medical imaging techniques, such as X-rays and MRI.

Dual-Energy X-Ray Absorptiometry

A method used to assess bone mineral density and body composition by using two different X-ray beams at varying energy levels.