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

question 23

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) Acquisition of assets at below replacement value.
• 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:

Consideration

A legal concept referring to something of value exchanged between parties in a contract, making the agreement binding and enforceable.

Unforeseen Circumstances

Events that could not have been predicted or expected and may impact contractual agreements or obligations.

Preexisting Duty Rule

A legal principle that asserts no additional consideration is necessary to modify a contract when a party is already legally obligated to perform a duty.

Bilateral Contract

A type of agreement where both parties make a promise to each other to perform certain acts or refrain from performing certain acts.