Which of the Following Statements About Mergers Is True

question 11

Multiple Choice

Which of the following statements about mergers is true?

• A)When deciding on a merger, the acquiring firm should use its own cost of capital to evaluate the value of the acquisition.
• B)A merger will add value only if synergies exist, which is why most mergers take place.
• C)Most mergers result in added value because the resultant firm is more diversified than the individual firms were before the merger.
• D)None of the above is a true statement.

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