If Two Merged Firms Are Shown to Have a Higher

question 12

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:

Correct Hybridization

The appropriate mixing of atomic orbitals to form hybrid orbitals that can explain the bonding in a molecule.

Atom

The basic unit of a chemical element, consisting of a nucleus of protons and neutrons, surrounded by electrons.

Molecule

The smallest particle in a chemical element or compound that has the chemical properties of that element or compound.

Sigma Bond

A type of covalent bond formed by the head-on overlap of atomic orbitals, involving two electrons shared between two atoms.