1. Mergers and acquisitions can reduce the risk of the firm. But investors can diversity their portfolio and achieve the same risk reduction. Therefore, this is not a valid argument in favor or mergers and acquisitions. This argument overlooks which of the following?

i. Reduction of risk increases the debt capacity of the firm and therefore increases value. This effect cant be achieved by investors rebalancing their portfolio.

ii. Mergers and acquisitions always produce synergies.

A. i only B. ii only C. Both of the above D. Neither of the above