The Argument That Mergers Are Valuable Because They Create Revenue

question 62

Multiple Choice

The argument that mergers are valuable because they create revenue synergies is based on

• A)the opportunity to expand into less than fully competitive markets.
• B)the diversification effects of combining dissimilar asset and liability portfolios.
• C)realizable economies of scope.
• D)the enhancement of revenues by acquiring a bank in a growing market.
• E)the opportunity to expand into less than fully competitive markets, the diversification effects of combining dissimilar asset and liability portfolios, and the enhancement of revenues by acquiring a bank in a growing market.

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Definitions:

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances in bank accounts.

Fed

Short for the Federal Reserve System, which is the central banking system of the United States.

Open Market Operations

Actions by a central bank to buy or sell government securities in the open market to influence the money supply and interest rates, a key tool of monetary policy.

Government Securities

Financial instruments issued by the government to finance its expenditures, offering a return to investors.