Which Statement Best Describes a Merger Concept

question 66

Multiple Choice

Which statement best describes a merger concept?

• A)A conglomerate merger is one where a firm combines with another firm in the same industry.
• B)Regulations in Canada prohibit acquiring firms from using common shares to purchase another firm.
• C)Defensive mergers are designed to make a company less vulnerable to a takeover.
• D)The corporate valuation method and the equity residual method, even properly applied, produce different results.

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.

Law of Diminishing Marginal Utility

The principle that as a person consumes more of a product, the satisfaction (utility) gained from consuming each additional unit decreases.

Diminishing Marginal Utility

is an economic principle stating that as a person increases consumption of a product, there is a decline in the additional satisfaction (utility) that person gains from consuming one more unit of the product.

Marginal Utility

The additional satisfaction or usefulness obtained from acquiring or consuming one more unit of a good or service.