A Purely Financial Merger

question 24

Multiple Choice

A purely financial merger:

• A) increases the risk that the merged firm will default on its debt obligations.
• B) has no effect on the risk level of the firm's debt.
• C) reduces the value of the option to go bankrupt.
• D) has no effect on the equity value of a firm.
• E) reduces the risk level of the firm thereby increasing the value of the firm's equity.

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Definitions:

Adaptive Value

The adaptive value of a trait or behavior pertains to its effectiveness in helping an organism survive and reproduce in its environment.

Conservation

The protection, preservation, management, or restoration of wildlife and natural resources.

Attachment

An emotional tie with another person; shown in young children by their seeking closeness to the caregiver and showing distress on separation.

Authoritarian Parenting

A strict parenting style characterized by high demands and low responsiveness, where parents expect obedience without explanation and often enforce rules through punishment.