Which of the Following Statements Is Most CORRECT

question 13

Multiple Choice

Which of the following statements is most CORRECT?

• A) Regulations in the United States prohibit acquiring firms from using common stock to purchase another firm.
• B) Defensive mergers are designed to make a company less vulnerable to a takeover.
• C) Hostile mergers always create value for the acquiring firm.
• D) In a tender offer, the target firm's management always remain after the merger is completed.
• E) A conglomerate merger is one where a firm combines with another firm in the same industry.

---

Definitions:

Equilibrium

A state in a market or economy where supply equals demand, resulting in stable prices and quantities.

Maximin Strategy

A decision-making rule used in situations with uncertainty to maximize the minimum gain that can be achieved.

Prisoners' Dilemma

A scenario in game theory where two individuals act in their own self-interest but would have been better off cooperating.

Collusive Outcome

A situation in which firms in a market or industry agree to set prices or output levels cooperatively, often leading to higher prices for consumers.