Which of the following statements is most CORRECT?
A. The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the two firms will have similar betas.
B. The goal of merger valuation is to value the target firm's total capital at the target firm's weighted average cost of capital because a firm is acquired from all of its investors--both shareholders and creditors.
C. The basic rationale for any financial merger is synergy and, thus, the estimation of pro forma cash flows is the single most important part of the analysis.
D. In most mergers, the benefits of synergy and the premium the acquirer pays over the market price are summed and then divided equally between the shareholders of the acquiring and target firms.
E. The primary rationale for most operating mergers is synergy.
Answer: E
You might also like to view...
Employees who listen to solve problems, strengthen interpersonal ties, encourage creativity, and facilitate networking are said to be
A) opportunistic B) dogmatic C) altruistic D) systematic
On January 1, 2019, Parker Advertising Company issued $50,000 of six-year, 3% bonds when the market interest rate was 4%. The bonds were issued for $47,356. Parker uses the effective-interest method of amortization for bond discount. Semiannual interest payments are made on June 30 and December 31 of each year. Prepare the amortization table for the first four interest payments. (Round your answers to the nearest dollar number.)
In-house sales forces are best suited for situations involving stable markets and short sales
cycles. Indicate whether the statement is true or false
A ________ is a term for a mark that has become a common term for a product line or type of service and therefore has lost its trademark protection
A) service mark B) orphan work C) generic name D) private brand