Explain why risk-diversification benefits and earnings growth are not good justifications for a takeover intended to increase

Question:

Explain why risk-diversification benefits and earnings growth are not good justifications for a takeover intended to increase shareholder wealth.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of Corporate Finance

ISBN: 978-0321818171

2nd Canadian edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

See More Books

Question Posted: Jan 08, 2019 10:56 AM

See More Questions

Assume that you wanted to expand your Learning English business to other non-U.S. countries where some individuals may want to speak English. a. Explain why you might be able to stabilize the profits...
Organic Solutions (OS), one of the nations largest plant wholesalers in the southeastern United States, was poised for expansion. Through strong profitability, a conservative dividend policy, and...
1. Why is diversification important? How is diversification achieved? 2. Solely on the basis of diversification, is there an argument for selling any of the stocks? In addition to risk reduction...
?? Helen's investment of $500 has grown, at a rate of 13% compounded annually, for 45 years. What is the value of her investment today?
Chisholm Co. uses special journals and a general journal. Identify the journal in which each of the following transactions is recorded: 1. Sold merchandise on account. 2. Granted a cash refund for a...
What is sales and operations planning? How is it done?
Search the Internet for the term IT outsourcing and find at least two articles that discuss outsourcing. Summarize the articles and answer the following questions: LO.1
On August 1, 2014, Delanie Tugut began a tour company in the Northwest Territories called Tugut Arctic Tours. The following occurred during the first month of operations: Aug. 1 Purchased office...
THE SMITH COMPANY Using the business transactions below, complete t-accounts for the Smith Company. I have provided a blank sheet of t-accounts as an attachment to this assignment. The company...
When a glass rod is rubbed with a silk cloth, charges appear on both. A similar phenomenon is observed with many other pairs of bodies. Explain how this observation is consistent with the law of...
On average, what happens to the acquirer share price on the announcement of a takeover?
What are the steps in the takeover process?
A particular basketball player successfully scores about 75% of his free throw attempts. Approximate the probability that he makes strictly more than 145 of 200 attempts.
Consider the following double loop and identify the dependence. Verify the dependence(s) by applying GCD test and Bounds test. Use the direction vector of (1, -1) corresponding to T on (5M) S. L1: do...
After discovering a vulnerability in the passwd utility, the Linux developers have decided that it is too dangerous to continue to run the utility as root (through setuid). Unfortunately, there's no...
Your supervisor comes to you and says, that as a company, you're facing multiple communication challenges. Since transitioning to a remote workforce, communication has been extremely poor....
You are developing an application that will be running on several hundred Amazon EC2 instances. The application on each instance will be required to reach out through a file system protocol...
What is the danger of mixing elements ("hybrid strategy") from both agile and lean SC strategies?
Do you think corporate social responsibility is important? Why or why not?
The comparative statements of financial position of Menachem NV at the beginning and end of the year 2019 appear below. Net income of ¬34,000 was reported, and dividends of ¬23,000 were paid...
DFB, Inc., expects earnings at the end of this year of $5 per share, and it plans to pay a $3 dividend to shareholders (assume that is one year from now). DFB will retain $2 per share of its earnings...
Maynard Steel plans to pay a dividend of $3 this year. The company has an expected earnings growth rate of 4% per year and an equity cost of capital of 10%. a. Assuming that Maynards dividend payout...
You have just purchased a house for $500,000 that is located very close to the university you attend. You plan to put $100,000 down and borrow $400,000. You need to decide which mortgage deal to...
help!!! Use the above information to calculate ending inventory using FIFO for a company that uses a perpetua/inventory system
Rocky Mountain Chocolate Factory (RMCF) founder and president Frank Crail employs 220 people in 361 outlets in the United States, Canada, United Arab Emirates, Japan, South Korea and Saudi Arabia. If...
The market price of a semi-annual pay bond is $979.86. It has 21.00 years to maturity and a yield to maturity of 7.34%. What is the coupon rate? Submit Answer format: Percentage Round to: 0 decimal...

Explain why risk-diversification benefits and earnings growth are not good justifications for a takeover intended to increase

Question:

Step by Step Answer:

Like a large portfolio large firms bear less idiosyncratic risk so often mergers are justified on th...View the full answer

Fundamentals of Corporate Finance

Students also viewed these Business questions