Risk averse investors may discount the future earnings of the merged firm at a higher rate.

Name: Risk averse investors may discount the future earnings of the merged firm at a higher rate.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Risk averse investors are more cautious and tend to demand higher returns for taking risks. Therefore, they may discount the future earnings of a merged firm at a higher rate to compensate for the perceived risk of the merger.

Risk Averse Investors May Discount the Future Earnings of the Merged