True or False questions. Provide explanations for the answers

2. Merger Concepts Indicate whether you think the following claims regarding takeovers are true or false. In each case, provide a brief explanation for your answer. a. By merging competitors, takeovers have created monopolies that will raise product prices, reduce production, and harm consumers. PTER 29 Mergers, Acquisitions, and Divestitures 813 b. Managers act in their own interests at times and in reality may not be ans shareholders. Takeovers may reflect runaway management. at times and in reality may not be answerable to c. In an efficient market, takeovers would not occur because market prices would the true value of corporations. Thus, bidding firms would not be justified in paying premiums above market prices for target firms. d. Traders and institutional investors, having extremely short time horizons, are influ- enced by their perceptions of what other market traders will be thinking of stock prospects and do not value takeovers based on fundamental factors. Thus, they will sell shares in target firms despite the true value of the firms. e. Mergers are a way of avoiding taxes because they allow the acquiring firm to write up the value of the assets of the acquired firm. f. Acquisitions analysis frequently focuses on the total value of the firms involved. An acquisition, however, will usually affect relative values of stocks and bonds, as well as their total value