The Synergy of an Acquisition Between Firm a and Firm

question 36

Multiple Choice

The synergy of an acquisition between Firm A and Firm B can be determined by:

• A) subtracting the change in cost from the change in revenue.
• B) subtracting the change in taxes form the change in revenue.
• C) subtracting the change in capital requirements from the change in revenues.
• D) discounting the change in the cash flows of the combined firm by the risk adjusted discount rate.
• E) discounting the change in the revenues of the combined firm by the risk adjusted discount rate.

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Definitions:

Allan Paivio

A psychologist best known for his dual-coding theory, which posits that visual and verbal information are processed and stored differently in the memory.

Identifies

Recognizes, determines, or establishes the identity or essential qualities of something.

Serial-Position Effect

The tendency to recall the first and last items in a list more easily than those in the middle.

Eyewitness Recall

The process by which individuals remember and report events they have observed, significantly relevant in the context of legal testimony.