Which One of the Following Statements Is Correct Concerning the Cost

question 42

Multiple Choice

Which one of the following statements is correct concerning the cost of two firms merging? The cost:

• A) is fixed when the merger is financed with cash.
• B) can be affected by postmerger gains if cash is used.
• C) decreases as the postmerger share price increases when stock is used to finance the merger.
• D) is not determined until after the merger, regardless of the type of financing.

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Definitions:

Social Conditioning

The process through which individuals learn norms, values, behaviors, and social skills appropriate to their society through experience and interaction.

Yerkes-Dodson Law

A psychological principle stating that performance increases with physiological or mental arousal, but only up to a point, after which performance begins to decrease.

Arousal

A state of being physiologically alert and responsive to stimuli, often leading to increased physical activity and cognitive awareness.

Hypothalamus

A small region of the brain that plays a crucial role in many important functions, including releasing hormones, regulating body temperature, and maintaining daily physiological cycles.