Which One of the Following Statements Is Correct Concerning the Cost

question 42

Multiple Choice

Which one of the following statements is correct concerning the cost of two firms merging? The cost:

• A) is fixed when the merger is financed with cash.
• B) can be affected by postmerger gains if cash is used.
• C) decreases as the postmerger share price increases when stock is used to finance the merger.
• D) is not determined until after the merger, regardless of the type of financing.

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Definitions:

Null Hypothesis

A statistical hypothesis that assumes no difference or effect in a particular situation, often set to be tested against an alternative hypothesis.

Level of Significance

Typically denotes the threshold under which the null hypothesis is rejected, often identical to the significance level.

Critical Value

A threshold in hypothesis testing that determines the boundary for accepting or rejecting the null hypothesis.

Test Statistic Value

A value calculated from sample data that is used to make a decision in a hypothesis test.