If Cross-Border Acquisitions Generate Synergistic Gains

question 45

Multiple Choice

If cross-border acquisitions generate synergistic gains,

• A)then both the acquiring and target shareholders gain wealth at the same time.
• B)then one can argue that cross-border acquisitions are mutually beneficial and thus should not be thwarted both from a national and global perspective.
• C)then the value of the combined firm is greater than the stand-alone valuations of the individual (acquiring and target) firms.
• D)all of the above.

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Definitions:

Interest-Rate Effect

Explains how changes in the interest rate influence the level of spending on consumer goods and services, typically suggesting that higher rates reduce spending.

Money Market

A segment of the financial market where short-term financial assets are traded, facilitating the borrowing and lending of short-term funds.

Liquidity Preference Theory

A theory that suggests individuals prefer to have their resources in liquid form as opposed to investing in long-term assets, affecting interest rates and economic activity.

Money Demanded

The total amount of money that households and businesses wish to hold at any given interest rate, at a specific time.