Which of These Makes the Following a True Statement? Diversification

question 96

Multiple Choice

Which of these makes the following a true statement? Diversification resulting from a merger can:

• A) make the debt of the merged firm more risky, thus lowering the cost of capital.
• B) make the debt of the merged firm less risky, thus lowering the cost of capital.
• C) make the debt of the merged firm less risky, thus raising the cost of capital.
• D) None of the options make the statement true.

---

Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price level.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a specific price in a given period.

Tariffs

Taxes imposed by a government on imported goods.

Imported Oil

Oil that is brought into a country from another, typically used as a critical input for energy production and transportation.