Which of the Following Statements Is False

question 45

Multiple Choice

Which of the following statements is false?

• A) All else being equal, larger firms, because they are more diversified, have an increased probability of bankruptcy.
• B) To justify a takeover based on operating losses, management would have to argue that the tax savings are over and above what the firm would save using carryback and carryforward provisions.
• C) It is possible to combine two companies with the result that the earnings per share of the merged company exceed the premerger earnings per share of either company, even when the merger itself creates no economic value.
• D) When an acquirer buys a private target, it provides the target's owners with a way to reduce their risk exposure by cashing out their investment in the private target and reinvesting in a diversified portfolio.

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Definitions:

Dehydrating

The process of removing water from a substance or compound, often to drive a chemical reaction or preserve materials.

Mechanism

The detailed step-by-step process or pathway by which a chemical reaction occurs, including the rearrangements of bonds and intermediate stages.

Reaction

A process in which substances interact to form new products, involving the reorganization of atoms or groups of atoms.

Ammonia

A compound of nitrogen and hydrogen with the formula NH3, characterized by its pungent smell and used as a fertilizer and cleaning agent.