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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