Why Would a Company Choose to Engage in a Conglomerate

question 86

Multiple Choice

Why would a company choose to engage in a conglomerate merger instead of a vertical or horizontal merger?

• A)A conglomerate merger is done to reduce risk.
• B)Double taxation does not occur when the merger is with a company outside the normal business environment of the acquiring company.
• C)The conglomerate merger results in reduced liability while the other two types of mergers do not.
• D)It is easier to dissolve a conglomerate merger than the other types of mergers.
• E)Government regulation of conglomerate mergers is minimal.

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Definitions:

Merchandise Purchases Budget

A financial plan that estimates the cost of goods that a retailer plans to buy over a certain period to maintain a desired inventory level.

Budgeted Cost

An estimated financial plan for expenditures over a specified period, often used for controlling costs.

Inventory Planning

The method of identifying the best amount and schedule of inventory to ensure it matches up with sales and production capabilities.

Cash Payments

The outflow of cash to settle obligations, such as expenses or the purchase of assets.