Which of the Following Statements Is Most CORRECTσ

question 19

Multiple Choice

Which of the following statements is most CORRECTσ

• A) financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the firm's capital structure, it will not affect its overall required rate of return.
• B) the basic rationale for any financial merger is synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis.
• C) in most mergers, the benefits of synergy and the premium the acquirer pays over the market price are summed and then divided equally between the shareholders of the acquiring and target firms.
• D) the primary rationale for most operating mergers is synergy.
• E) the acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.

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Definitions:

Slavery

A system where individuals are owned by others, deprived of personal freedom and forced to perform labor or services without consent.

Minimum Wage

The lowest wage permitted by law or by a special agreement that can be paid to an employee.

Wages

Compensation or earnings paid to an employee by an employer based on the hours worked or the output produced.

Appeal to Force

A logical fallacy where a conclusion is supported by a threat or use of force, rather than by evidence or reasoning.