A Merger That Allows a Firm to Access a Cheaper

question 43

Multiple Choice

A merger that allows a firm to access a cheaper way of financing its projects is an example of:

• A)Financial economies of scope
• B)Financial economies of scale
• C)Financing synergy
• D)Tax benefits

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Profit and Loss Ratio

A financial metric that compares the gains and losses of a business over a specific period, often used to assess profitability.

Initial Investment

The initial amount of capital used to start a business venture, purchase an asset, or make an investment.

Interest Allowance

A sum that lenders may offer to borrowers, reducing the effective cost or total amount of payable interest on a loan.