The original creditors of both firms in a merger would benefit from the overall decrease in the probability of bankruptcy that attends the merger, which in turn results from the ______ associated with creditors now having a claim against a larger combined firm.

Question

Quizplus · Accepted Answer

The correct answer is D) co-insurance. This term refers to the benefit that arises when creditors now have a claim against a larger, combined entity rather than two separate, smaller entities. This larger entity is typically more financially stable and diverse, reducing the overall risk of bankruptcy and thus benefiting the original creditors of both firms involved in the merger.

The Original Creditors of Both Firms in a Merger Would