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:

Attachment and Trust

The bond that develops between individuals, fostering security and confidence in the reliability of another.

Insecure Attachment

A problematic emotional bond between a child and their caregiver, marked by anxiety, fear, or avoidance.

Trust Issues

Difficulties in trusting others, often resulting from negative past experiences or perceived betrayals.

Parental Attachment

The emotional bond that forms between a child and their parent or caregiver, which plays a crucial role in the child's development.