Which of the Following Is Not a Potential Benefit of a Merger

question 29

Multiple Choice

Which of the following is not a potential benefit of a merger?

• A) Greater access to financial markets,and thus,be in a better position to raise debt and equity capital.
• B) Achieving risk reduction while perhaps maintaining the firm's rate of return.
• C) Tax loss carry-forward might be available in a merger if one of the firms has previously sustained a tax loss.
• D) Increased standard deviation of earnings per share.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term liquidity and ability to finance day-to-day operations.

Salvage Value

The anticipated sale price of an asset at the conclusion of its operational lifespan.

Pretax Return

Income earned by a business before deductions for income taxes, serving as a measure of its profitability.

Investment Projects

Initiatives or plans undertaken by an organization or individual involving the allocation of resources with the expectation of generating future returns.