Which of the Following Statements Regarding Mergers and Taxes Is

question 51

Multiple Choice

Which of the following statements regarding mergers and taxes is FALSE?

• A)Because it may be easier to measure performance accurately in a conglomerate,agency costs may be reduced and resources may be more efficiently allocated.
• B)Because these employees are obligated to hold idiosyncratic risk,they benefit when the firm reduces that risk by conglomerating.
• C)Like a large portfolio,large firms bear less idiosyncratic risk,so often mergers are justified on the basis that the combined firm is less risky.
• D)Because most stockholders will already be holding a well-diversified portfolio,they get no further benefit from the firm diversifying through acquisition.

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Definitions:

Distress

A state of emotional, mental, or physical strain or tension resulting from adverse or demanding circumstances.

Severe Stage

A critical or extreme phase in the development or progression of a situation, condition, or disease.

Workplace Violence

Any act or threat of physical violence, harassment, intimidation, or other threatening disruptive behavior that occurs at the work site.

Cash Register

A machine used in businesses to calculate and record sales transactions, and to store money.