Assume the shareholders of a target firm benefit from being acquired in a stock transaction. Given this, these shareholders

Which one of the following best defines synergy given the following? VA = Value of firm A VB = Value of firm B VAB = Value of merged firm AB    A.  (VA + VB) - VAB B.  VAB - (VA + VB) C.  greater of 0 or (VA + VB) - VAB D.  greater of 0 or VAB - (VA + VB) E.  greater of 0 or VAB Refer to section 26.4

42.

Which one of the following statements is correct?    A.  Firms with large net operating losses tend to be acquiring firms rather than target firms. B.  The leverage associated with an acquisition increases the tax liability of the acquiring firm. C.  If either an increase or a decrease in the level of production causes the average cost per unit to increase then the firm is currently operating at its optimal production level. D.  Firms can always benefit from economies of scale if they increase the size of their firm through acquisitions. E.  If a firm uses it surplus cash to acquire another firm then the shareholders of the acquiring firm immediately incur a tax liability related to the transaction. Refer to section 26.4

43.	Which one of the following pairs of businesses could probably benefit the most by sharing complementary resources?    A.  roofer and architect B.  tennis court and pharmacy C.  ski resort and golf course D.  dry cleaner and maid service E.  trucking company and lawn service Refer to section 26.4

44.

Assume the shareholders of a target firm benefit from being acquired in a stock transaction. Given this, these shareholders are most apt to realize the largest benefit if the:    A.  acquiring firm has the better management team and replaces the target firm's managers. B.  management of the target firm is more efficient than the management of the acquiring firm which replaces them. C.  management of both the acquiring firm and the target firm are as equivalent as possible. D.  current management team of the target firm is kept in place even though the managers of the acquiring firm are more suited to manage the target firm's situation. E.  current management team of the target firm is technologically knowledgeable but yet ineffective. Refer to section 26.4