If two merged firms are shown to have a higher combined market value than the sum of their individual market values,then:
A) there are economic gains.
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 a merger results in a higher combined market value than the sum of individual market values, it indicates that there are economic gains. This means that the merged firm is worth more than the sum of its parts, and there has been an increase in efficiency, synergy, or growth opportunities that have led to this increased value.

If Two Merged Firms Are Shown to Have a Higher