The Text Gives a Number of Valid, Acceptable Reasons for Companies

question 19

Multiple Choice

The text gives a number of valid, acceptable reasons for companies to merge. Which of the following is NOT acceptable?

• A) Synergistic benefits arising from mergers.
• B) Reduction in competition resulting from mergers.
• C) Attempts to stabilize earnings by diversifying.
• D) Attempts to minimize taxes by acquiring a firm with large accumulated losses that can be used immediately.
• E) Using surplus cash to acquire another firm and prevent unfavorable tax consequences for shareholders.

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Definitions:

Theory

A system of ideas intended to explain something, based on general principles independent of the thing to be explained.

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation, that can be tested through experimentation and observation.

Operational Definition

A clear, precise description of a variable in terms of the procedures used to measure or manipulate it in a research study.

Anxiety

A feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.