Which of the Following Statements Is Most CORRECT

question 15

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 two firms will have similar betas.
• B) The goal of merger valuation is to value the target firm's total capital at the target firm's weighted average cost of capital because a firm is acquired from all of its investors--both shareholders and creditors.
• C) 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.
• 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:

Identical Twins

Siblings born from the same pregnancy, sharing the same genetic material because they originated from a single fertilized egg that split.

Menarche

The first occurrence of menstruation in a female, marking the onset of reproductive capability.

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A gauge of one's or a household's standing in society and economy, influenced by their salary, educational achievements, and job role.

Severe Stress

An intense state of mental or emotional strain or tension resulting from adverse or demanding circumstances.