Which of the Following Is a Valid,acceptable Reason for a Closely

question 58

Multiple Choice

Which of the following is a valid,acceptable reason for a closely held firm proposing a merger activity?

• A)synergistic benefits arising from mergers
• B)reduction in competition resulting from mergers
• C)attempts to stabilize earnings by diversifying
• D)minimizing taxes when disposing of excess cash

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Definitions:

Capital Structure

The mix of various forms of capital used by a company, including debt and equity, to finance its operations.

Equity

Represents the value that would be returned to a company's shareholders if all of the assets were liquidated and all of the company's debts were paid off.

Refunding Investment Outlay

The process of reallocating or investing capital in new assets or projects with the intention of generating returns or benefits that exceed the initial costs.

Marginal Tax Rate

The marginal tax rate is the rate of tax that applies to the next dollar of taxable income above a pre-determined level.