If two merged firms are shown to have a higher combined market value than the sum of the individual market values, then:
A)Economic gains are said to have taken place
B)The firms were previously underpriced
C)The merger provides diversification to investors
D)There is no cost involved in the merger

Question

Quizplus · Accepted Answer

The fact that the combined market value of the merged firms is higher than the sum of their individual market values suggests that economic gains have taken place. This may be due to synergies created by the merger, such as increased efficiencies or economies of scale, which can lead to higher profitability and increased market value.

If Two Merged Firms Are Shown to Have a Higher