Which of the Following Statements Regarding Reverse Mergers Is True

question 29

Multiple Choice

Which of the following statements regarding reverse mergers is true?

• A)In a reverse merger, money flows out of the public sector into the private sector.
• B)In a reverse merger, a large, publicly-held company spins off one of its divisions, which itself becomes a publicly-traded company.
• C)A reverse merger is a method of making a publicly-held firm private once again.
• D)In a reverse merger, a large, privately-held firm merges with a smaller firm that is publicly-held.

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Definitions:

Promisor

An individual or entity that makes a promise or agreement to perform a specified act or service in a contract.

Delegable

Refers to duties or tasks that can be assigned or transferred from one party (the delegator) to another (the delegatee), legally allowing for the completion of the task by someone other than the original party.

Duty

A moral or legal obligation to perform or refrain from performing a certain action.

Novation

The act of replacing an old obligation with a new one, substituting a new party into an existing agreement or completely replacing the original contract.