One Indication That Investors Expect No Synergy from a Merger

question 23

Multiple Choice

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

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

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Definitions:

Monthly Compounding

Interest calculation method where interest is added to the principal sum at the end of each month, compounding the amount over time.

Compounded Quarterly

The process of calculating interest on an initial investment where the interest is reinvested and additional interest is earned on interest, done four times a year.

Compounded Monthly

Compounded monthly refers to the process where interest is added to the principal sum of a loan or deposit so that the added interest also earns interest from then on.

Compounded Monthly

A method where interest is added to the principal every month, allowing the interest to earn interest in subsequent months.