Merging in Order to Lower Financing Costs Is Likely to Fail

question 4

Multiple Choice

Merging in order to lower financing costs is likely to fail for the following reason:

• A)costs of issuing larger amounts of debt increase.
• B)tax shields decrease for larger companies.
• C)any gain from lowering the required interest rate is offset by increased guarantees on the debt.
• D)it is difficult for bondholders to calculate the postmerger debt outstanding.

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Definitions:

Women's Freedom

The rights and liberties that women have to live their lives with a sense of self-determination, equality, and independence from patriarchal constraints.

Employment

The state or condition of having a paid occupation; engaged in work especially for wages or salary.

Axis Powers

In World War II, the nations of Germany, Italy, and Japan.

Allied Powers

The coalition of countries, notably Britain, France, the US, and the USSR, which opposed the Axis powers during World War II.