When Mergers and Acquisitions Are Undertaken in Pursuit of Synergy

question 30

Multiple Choice

When mergers and acquisitions are undertaken in pursuit of synergy which of the following relationships describes the beliefs that guide managers. Let A and B represent the firms involved.

• A) value of A and B merged > value of A + value of B if the firms remain separate
• B) value of A and B merged = value of A + value of B if the firms remain separate
• C) value of A and B merged < value of A + value of B if the firms remain separate
• D) value of A minus B > value of A + value of B if the firms remain separate

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Definitions:

IRA

Individual Retirement Account, a tax-advantaged investing tool for individuals to earmark funds for retirement savings.

Contributed

To provide or donate something of value, often used in the context of contributing money to a retirement account or charity.

Child Tax Credit

A tax credit offered to taxpayers for each qualifying child, aimed at reducing a taxpayer's liability on a dollar-for-dollar basis.

AGI

Adjusted Gross Income, which is your gross income minus allowable deductions, used as a basis for calculating taxable income.