Multiple Choice
The portfolio effect after a merger should provide the firm with risk reduction benefits that result in:
A) the expected value of earnings per share may increase as a result of the merger,the standard deviation of possible outcomes may increase as a result of risk reduction through diversification.
B) the expected value of earnings per share may remain relatively constant as a result of the merger,the standard deviation of possible outcomes may increase as a result of risk reduction through diversification.
C) the expected value of earnings per share may decline as a result of the merger,the standard deviation of possible outcomes may decline as a result of risk reduction through diversification.
D) the expected value of earnings per share may remain relatively constant as a result of the merger,the standard deviation of possible outcomes may decline as a result of risk reduction through diversification.
Correct Answer:
Verified
Correct Answer:
Verified
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