Which of the Following Statements Is Most CORRECT

question 20

Multiple Choice

Which of the following statements is most CORRECT?

• A) Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the firm's capital structure, it will not affect its overall required rate of return.
• B) The basic rationale for any financial merger is synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis.
• C) In most mergers, the benefits of synergy and the premium the acquirer pays over the market price are summed and then divided equally between the shareholders of the acquiring and target firms.
• D) The primary rationale for most operating mergers is synergy.
• E) The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.

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Definitions:

Autonomy

The capacity to make an informed, uncoerced decision; often related to the concept of independence and self-direction.

Judgment Goal

Refers to the objective to make evaluations or decisions based on certain criteria or standards.

Current Concern

A current concern involves immediate issues or interests that are of importance or relevance to an individual at the present time.

Idiographic Goals

Highly personalized or unique goals that are specific to an individual, reflecting personal aspirations, values, and interests.