Which one of the following statements is correct?
A) Acquiring ﬁrms tend to avoid ﬁrms with large net operating losses when they are seeking a target ﬁrm to acquire.
B) If an acquisition increases the debt level of a ﬁrm the tax liability of the ﬁrm tends to increase as a result.
C) If either an increase or a decrease in the level of production causes the average cost per unit to increase the ﬁrm is currently operating at its optimal size.
D) Firms can always beneﬁt from economies of scale if they increase the size of their ﬁrm through acquisitions.
E) If a ﬁrm uses its surplus cash to acquire another ﬁrm the shareholders of the acquiring ﬁrm immediately incur a tax liability related to the transaction.

Question

Quizplus · Accepted Answer

The Answer of Which one of the following statements is correct?
A) Acquiring ﬁrms tend to avoid ﬁrms with large net operating losses when they are seeking a target ﬁrm to acquire.
B) If an acquisition increases the debt level of a ﬁrm the tax liability of the ﬁrm tends to increase as a result.
C) If either an increase or a decrease in the level of production causes the average cost per unit to increase the ﬁrm is currently operating at its optimal size.
D) Firms can always beneﬁt from economies of scale if they increase the size of their ﬁrm through acquisitions.
E) If a ﬁrm uses its surplus cash to acquire another ﬁrm the shareholders of the acquiring ﬁrm immediately incur a tax liability related to the transaction.

Which One of the Following Statements Is Correct