The Main Reason That a Strategic Alliance Is Often an Attractive

question 25

Multiple Choice

The main reason that a strategic alliance is often an attractive alternative to a merger or acquisition is:

• A)Alliances avoid government restrictions relating to antitrust and foreign direct investment
• B)Alliances permit firms to access one another's resources and capabilities without the costs and risks of a merger or acquisition
• C)Alliances allow a firm to create growth options
• D)Alliances allow risk sharing in giant projects.

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Definitions:

Capital Loss

The result of selling an investment or asset for less than its original purchase price.

Tax Expense

The total amount of tax an individual or corporation owes to the government, displayed on financial statements.

Appreciated Property

An asset that has increased in value over time from its original purchase price.

Nonliquidating Distribution

A nonliquidating distribution refers to distributions made by a corporation to its shareholders that are not in complete termination of the shareholder’s interest in the corporation.