All of the Following Are Potential Benefits to a Corporation

question 71

Multiple Choice

All of the following are potential benefits to a corporation in offering share purchases rather than non-equity compensation except:

• A) a share purchase more readily qualifies a merger for a tax-free exchange.
• B) a corporation may diminish the perceived dilutive effect of a merger.
• C) the shareholders of the acquired firm may defer any capital gains taxes.
• D) when the stock is sold,the tax is recognized.

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Definitions:

Total Product

The overall quantity of output produced by a firm from a given quantity of inputs.

Constant Rate

A consistent, unchanging speed or pace at which something occurs or changes over time.

Diminishing Marginal Returns

The principle that adding an additional factor of production results in a smaller increase in output after a certain point.

Total Product

The total output or production by a firm using a given amount of inputs within a specific period.