Two Thirds of Mergers Fail, but Many CEOs Will Still

question 40

Multiple Choice

Two thirds of mergers fail, but many CEOs will still try for a merger and risk millions of dollars because they believe that this one will be the exception. What mistake do these CEOs make?

• A) Sunk-cost trap
• B) Negativity bias
• C) Overconfidence
• D) Escalating commitment

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Definitions:

R

Represents the symbol for resistance in electrical circuits, measuring how much an object opposes the passage of electrons.

RC Parallel Circuit

An electrical circuit that contains both a resistor (R) and a capacitor (C) connected in parallel.

R

Symbol commonly used to represent resistance in an electrical circuit.

Reactive Power

The portion of electricity that oscillates between the source and load, essential for maintaining voltage levels in AC power systems but not converted into usable work.