Firm A is planning to acquire Firm B. If Firm A prefers to make a cash offer for the merger, it indicates that

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Firm A's willingness to make a cash offer for the merger indicates that its managers are optimistic about the postmerger value of A. This is because they are confident in their ability to raise the necessary funds for the cash offer and believe that the value of the combined firm will be higher than the cost of the acquisition. If they were pessimistic about postmerger value, they may opt for a stock-for-stock deal or another type of non-cash offer to limit their exposure.

Firm a Is Planning to Acquire Firm B