When Two Firms Merge and There Is No Synergy Gain

question 12

Multiple Choice

When two firms merge and there is no synergy gain but the only change is a reduction in risk:

• A) there is no effect on the bondholders or stockholders.
• B) both the bondholders and stockholders are made better off.
• C) the bondholders gain in value while the stockholders lose value.
• D) the stockholders gain in value while the bondholders lose value.

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Definitions:

Assimilation Model

A theory or approach suggesting that cultural or ethnic minorities should be absorbed into the dominant society, losing their original identities.

Societal Conditions

The state of society at a given time, including its norms, laws, and living standards.

Immigration

The action of coming to live permanently in a foreign country.

Operation Bootstrap

An economic development program initiated in Puerto Rico in the late 1940s to transform the economy from agriculture-based to industrial.