Which of the Following Statements Regarding Mergers and Taxes Is

question 24

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 employees holding a large fraction of their wealth in shares of the corporation for which they work 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:

Technical Skills

Abilities and knowledge needed to perform specific tasks related to technology, engineering, or other specialized fields.

Communication Skills

The ability to convey or exchange information effectively through various means, including speaking, writing, and nonverbal expressions.

Work Issues

Concerns or problems encountered in the workplace, which can range from interpersonal conflicts to systemic organizational problems impacting employee performance and well-being.

Age Difference

Refers to the variation in years between the ages of two or more individuals.