One Indication That Investors Expect No Synergy from a Merger

question 61

Multiple Choice

One indication that investors expect no synergy from a merger would be that:

• A) total market value of the merged firms does not change.
• B) the P/E ratio of the merged firms changes.
• C) the acquiring firm financed the merger with cash.
• D) the merged firms are from different industries.

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Definitions:

Carry

In finance, the cost or benefit associated with holding a financial position, such as the interest expense on borrowed funds or the yield earned on deposits.

AUM

Assets Under Management, representing the total market value of the investments a financial institution manages on behalf of clients.

Hedge Fund Fees

Charges associated with investing in a hedge fund, often including a management fee and a performance fee.

Equity Market

A financial market where shares of companies are issued and traded, also known as the stock market.