The following are dubious reasons for mergers:
I.diversification;
II.increase earnings per share (EPS);
III.lower financing costs;
IV.industry consolidation
A)I only
B)II and IV only
C)III and IV only
D)I, II, and III only

Question

Quizplus · Accepted Answer

Diversification, increasing EPS, and lowering financing costs are often considered dubious reasons for mergers because they may not create real value for shareholders. Diversification can be achieved more effectively by investors themselves, increasing EPS through a merger can be misleading if it doesn't result in actual value creation, and lower financing costs might not justify a merger if there are no other synergies. Industry consolidation, however, can be a legitimate strategic reason for a merger if it leads to increased market power and efficiencies.

The Following Are Dubious Reasons for Mergers