Which of the Following Statements Is Most CORRECT

question 13

Multiple Choice

Which of the following statements is most CORRECT?

• A) Regulations in the United States prohibit acquiring firms from using common stock to purchase another firm.
• B) Defensive mergers are designed to make a company less vulnerable to a takeover.
• C) Hostile mergers always create value for the acquiring firm.
• D) In a tender offer, the target firm's management always remain after the merger is completed.
• E) A conglomerate merger is one where a firm combines with another firm in the same industry.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage.

Mortgage Pass-Through

A type of security that pools mortgage loans and passes the principal and interest payments from borrowers to investors.

Mortgage Loans

Long-term loans used to purchase real estate property, secured by the property itself.

General Obligation Bonds

Bonds issued by municipalities that are backed by the full faith and credit of the issuing government, promising to repay the debt with general revenue.