In Complete Voluntary Liquidations, the Sum of the Firm's Parts

question 4

Multiple Choice

In complete voluntary liquidations, the sum of the firm's parts is worth more than the whole, for all of the following reasons EXCEPT:

• A)the assets (or divisions) may be worth more in the hands of more competent managers.
• B)liquidated assets always sell at a premium to their fair value.
• C)the special tax treatment afforded liquidations provides a source of value over and above the firm's value as a going concern.
• D)any diseconomies associated with excessive diversification can be eliminated by piecemeal sale through liquidation.

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Definitions:

Sympathetic Nervous System

A part of the autonomic nervous system that activates the body's responses under stress, preparing for the 'fight or flight' response.

Coronary Heart Disease

A condition where the heart's blood vessels, arteries, become damaged or diseased, leading to a reduction of blood flow to the heart muscle.

Hostility

Intense anger or aggression towards someone or something, often without a clear reason.

Blood Pressure

The force exerted by circulating blood on the walls of blood vessels, critical for maintaining the body's circulatory function.