A Horizontal Merger

question 5

Multiple Choice

A horizontal merger

• A) occurs when two firms that produce similar products combine their operations.
• B) will never be opposed by the U.S. government but a vertical merger will.
• C) always results in a loss of efficiency in a market.
• D) involves two firms at different stages of the production process.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholders out of its profits or reserves in the form of cash.

Tax Laws

are the legal rules and regulations governing how individuals, businesses, and other entities are taxed by the government.

Capital Gains

The profit from the sale of a capital asset, such as stocks or real estate, over its purchase price.

Residual Dividend Policy

A strategy for setting dividend payments based on the firm's residual or leftover equity after funding all its investment projects.