Which of the following statements is true concerning the use of mergers to reduce cyclicality and volatility?

I. The merger of large, public firms is a cost-effective way for shareholders to shed firm-specific risk due to cyclicality and volatility

II. The merger of a large firm with a small, private firm may reduce cyclicality and volatility risk for the small firm's owner.

III. Mergers that reduce cyclicality and volatility may still result in additional costs that outweigh the benefits

Select one: