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

If the combined market value of two merged firms is higher than the sum of their individual market values, it indicates that economic gains have taken place. This gain can arise from multiple sources such as synergies, increased market power, or cost savings.

If Two Merged Firms Are Shown to Have a Higher