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The purchase of assets at below their replacement cost and tax considerations are two factors that motivate mergers.

A) True
B) False

Correct Answer

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Since a manager's central goal is to maximize the firm's stock price,any merger offer that provides stockholders with significant gains over the current stock price will be approved by the current management team.

A) True
B) False

Correct Answer

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verified

The three main advantages of holding companies are (1)control with fractional ownership, (2)taxation benefits,and (3)isolation of operating risks.

A) True
B) False

Correct Answer

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verified

Discounted cash flow methods are not appropriate for evaluating mergers because the cash flows are uncertain and the discount rate can only be determined after the merger is consummated.

A) True
B) False

Correct Answer

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verified

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