Which of the following statements is most CORRECT? Oa. The primary rationale for most operating mergers is synergy. Ob. 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. Oc. Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the firm's capital structure, it will not affect its overall required rate of return. Od. 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. ce. The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.
Which of the following statements is most CORRECT? Oa. The primary rationale for most operating mergers is synergy. Ob. 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. Oc. Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the firm's capital structure, it will not affect its overall required rate of return. Od. 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. ce. The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have similar betas.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Which of the following statements is most CORRECT?
Oa. The primary rationale for most operating mergers is synergy.
Ob. 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.
Oc. Financial theory says that the choice of how to pay for a merger is really irrelevant because, although it may affect the
firm's capital structure, it will not affect its overall required rate of return.
Od. 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.
Oe. The acquiring firm's required rate of return in most horizontal mergers will not be affected, because the 2 firms will have
similar betas.
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