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Q25 - University of Houston-Victoria FIN 6352 Financial...

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FIN 6352 Financial Management FMQuiz25 Dr. Xavier Garza Gómez University of Houston-Victoria FIN 6352 Financial Management Review Quiz for Chapter 25 - Mergers, LBOs, Divestitures, and Holding Companies True-False 1. Synergistic merger effects can arise from a number of different sources including operating economies of scale, financial economies, and increased managerial efficiency. a. True b. False 2. A spin-off is a type of divestiture in which the assets of a division are sold to another firm. a. True b. False 3. The two principal advantages of holding companies are (1) that the holding company can control a great deal of assets with limited equity and (2) that the dividends received by the parent from the subsidiary are not taxed if the parent holds at least 50 percent of the subsidiary's stock. a. True b. False Multiple Choice: Concepts 4. Which of the following are given as reasons for the high level of merger activity in the U.S. during the 1980s? a. Synergistic benefits arising from mergers. b. Reduction in competition resulting from mergers. c. Attempts to stabilize earnings by diversifying. d. All of the above. e. Both a and c above.
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