Which of the Following Statements Is Most CORRECT

question 20

Multiple Choice

Which of the following statements is most CORRECT?

• A) Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the firm's capital structure, it will not affect its overall required rate of return.
• B) The basic rationale for any financial merger is synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis.
• C) In most mergers, the benefits of synergy and the premium the acquirer pays over the market price are summed and then divided equally between the shareholders of the acquiring and target firms.
• D) The primary rationale for most operating mergers is synergy.
• E) The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.

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Definitions:

Leader Effectiveness

Leader effectiveness is a measure of a leader's ability to achieve desired outcomes, influence followers, and contribute to organizational success.

Coalition Formation

Involves the creation of alliances or partnerships among groups or individuals to achieve shared objectives or to advance common interests.

Budgeting Process

The procedure of creating a plan to spend money over a certain period, guiding how financial resources are allocated.

Coercive Power

The ability to compel or influence someone's behavior through the threat of punishment or negative consequences.