Which statement best describes mergers?
A) The high Canadian dollar relative to foreign currencies makes Canadian companies comparatively inexpensive to foreign buyers, spurring many mergers.
B) The expansion of the junk bond market makes debt more freely available for large acquisitions and LBOs, resulting in an increased level of merger activity.
C) Increased nationalization of business and a desire to scale down and focus on producing in one's home country may virtually halt international mergers.

Question

Quizplus · Accepted Answer

The expansion of the junk bond market makes it easier for companies to raise large amounts of debt to finance mergers and acquisitions, leading to an increase in merger activity. This statement accurately describes the role of financial markets in driving merger activity.

A) is incorrect because it describes the effect of currency exchange rates on mergers, which is not a universal trend. 
C) is incorrect because it suggests that there is an increased focus on producing goods in one's home country, which may limit international mergers, but it does not provide a comprehensive understanding of the factors that drive merger activity.

Which Statement Best Describes Mergers