Which of the Following Statements Is Most CORRECT

question 20

Multiple Choice

Which of the following statements is most CORRECT?

• A) 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.
• B) The basic rationale for any financial merger is synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis.
• C) 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.
• D) The primary rationale for most operating mergers is synergy.
• E) The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.

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Definitions:

Communicate

The process of sharing information, ideas, and feelings between individuals or groups through speaking, writing, or other mediums.

Managerial Innovation

The introduction of new management practices, processes, or structures that aim to improve organizational effectiveness.

Organizational Change

The method by which a business or institution modifies its framework, tactics, practices, technologies, or corporate culture.

Design Competitions

Contests or challenges where individuals or groups submit designs in response to a set of criteria or themes, often with the aim of selecting the best.