If Two Merged Firms Are Shown to Have a Higher

question 74

Multiple Choice

If two merged firms are shown to have a higher combined market value than the sum of the individual market values, then:

• A)Economic gains are said to have taken place
• B)The firms were previously underpriced
• C)The merger provides diversification to investors
• D)There is no cost involved in the merger

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Definitions:

Settlement

The process of fulfilling the terms of a contract or agreement, often involving the payment for goods or services or the clearing of a financial instrument.

Probate

A legal process that deals with the assets and debts of a deceased person, ensuring proper distribution according to the will or the law.

Resided

To have been domiciled or located in a particular place.

Trust's Principal

The original assets placed into a trust by the grantor, excluding any income or appreciation generated by those assets.