If Two Leveraged Firms Merge, the Cost of Debt for the New

question 2

Multiple Choice

If two leveraged firms merge, the cost of debt for the new firm will generally be lower than it was for the two firms as separate entities. One reason for this is:

• A) strategic fits.
• B) net operating losses.
• C) surplus funds.
• D) co-insurance.

Recognize the role of cognitive dissonance in shaping attitudes and behaviors.

Identify strategies to increase compliance, including foot-in-the-door and door-in-the-face effects.

Describe the impact of social norms on individual behavior.

Explain the concept of groupthink and its potential negative outcomes on decision-making.