Goodday Is Merging with Bakers

question 47

Multiple Choice

Goodday is merging with Bakers.Goodday has debt with a face value of $80 and Baker has debt with a face value of $40.Bakers' stockholders receive stock in the combined firm in an amount equal to the stand-alone market value of Bakers.The pre-merger values of the firms given two economic states with equal probabilities of occurrence are as follows: What will be the gain or loss to the current shareholders of Goodday if the merger provides no synergy?

• A)−$10
• B)$0
• C)−$5
• D)$5
• E)$10

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Definitions:

Socialization

The process by which individuals learn the values, norms, and behaviors appropriate to their society.

Intersectionality

A concept used to describe the ways in which various aspects of identity interconnect on multiple and often simultaneous levels and can form interlocking systems of oppression.

Homogeneity

The quality or state of being composed of parts that are all of the same kind; uniformity.

Fluidity

The quality of being adaptable or capable of changing easily; often used in the context of gender, sexuality, and identity to describe a spectrum of experiences that are not fixed.