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babunello [35]
3 years ago
3

Based only on the knowledge that the premerger market share of two firms proposing to merge was 30 percent each, an economist wo

rking for the Justice Department was able to determine that, if approved, the postmerger HHI would increase by 1,800. Which of the following equations is a general rule explaining how the Herfindahl-Hirschman index is affected when exactly two firms (Firm i and Firm j) in the market merge, where Si is the market share of firm i and Sj. is the market share of firm j? (Hint: Compare a2 + b2 with (a + b)2.)
Business
1 answer:
adell [148]3 years ago
5 0

Answer:

A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and acquisitions are commonly done to expand a company's reach, expand into new segments, or gain market share.

When firms merge together, we have a synergy effect.

A synergy arises in a merger or acquisition when the combined value of the two firms is higher than the pre-merger value of both firms combined. For example, if firm A has a value of $500M, firm B has a value of $75M, and the merged firm has a value of $625M, there is a $50M synergy for this merger.

Synergy effect explains 2(a + b) can be greater than 2a + 2b. 2a + 2b is the market share of the two companies before merger which is $500m + $75m = $575m compared against the newly formed company's value after merger which is $625m. The synergy effect is additional $50m.

This is caused by cost reductions, due to efficiencies in the newly combined firm. Alternatively, they may arise due to new net incremental revenues brought about by the merged firm.

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Andreas93 [3]
The answer is Capital Budgeting.
5 0
3 years ago
Which of the following is NOT true of sales force compensation? a. Sales managers often offer rewards or incentives to motivate
scoundrel [369]

Answer:

c. Companies and industries with lower levels of compensation have lower turnover rates

Explanation:

Sales force compensation refers to how a company compensates its sales team for its efforts. They are the methods applied to pay sales representatives.  A company may decide to pay, either a fixed salary, salary plus commission, or commissions only.

If sales representatives feel that they are not adequately compensated, they may opt to look for better-paying jobs elsewhere.  Companies that pay lowly will always have a challenge in attracting and retaining the best sale people in the market. Sales incentives serve as a motivating factor to the salespeople.  A business or industry that pays poorly will have high employee turnover, as its workers will be always be seeking greener pastures.

7 0
4 years ago
A Resort in Hawaii is now available for sale for $400 million. Hilton Hotels Corp. and Marriott International Inc. are both cons
Agata [3.3K]

Answer:

b. Hilton should purchase the resort, but Marriott should not.

Explanation:

given data

Resort sale = $400 million

free cash flow = $45 million

time = 20 year

return = 8%

risk-free rate = 2%

Hilton beta =1.1

Marriott beta = 1.3

solution

we get here first NPV of the resort when the cost of capital is

Re = risk-free rate + beta( Rm - Rf)    ........................1

Re = 2 + 1.1 ( 8 - 2 )

Re = 8.6%

and

The NPV will be as

cash flow to free cash flow is = 45 million

so NPV is $22.767

and

as that at cost of capital of 9.8%,

The NPV will be

NPV = $11.6011

so we can say that Hilton should pursue the project due to the positive NPV

but due to the negative NPV here Marriott should not pursue the project.

4 0
4 years ago
Fournotts Corp., a sports shoe manufacturer, launched a new sports shoe.As a part of publicity, it invited its customers to try
kaheart [24]

Answer: (A) Experiential marketing

Explanation:

 Experiential marketing is basically provide the ability for evaluating the the personal connection in which the customer are ware about the products and the services which is provided by an organization.

This marketing techniques helps in increase the demand of the customer more personalization.

According to the given situation, the Fournotts corp. is one of the sports shoe manufacturer and for the publicity the organization invited the consumers for shoes trial and this refers to the experiential marketing strategy.

Therefore, Option (A) is correct.

6 0
4 years ago
A client interested in the returns offered by CMOs asks you which type has the lowest prepayment risk. What should you say
Margarita [4]

Answer: Planned amortization class (PAC) tranches

Explanation:

The planned amortization class (PAC) is a form of CMO which is typically put I place for that risk-averse investors. It gives a principal repayment schedule that have been predetermined in as much as there are certain range for the mortgage prepayment.

It should also be noted that it has top priority and also gets principal payments which can be up to certain amount.

5 0
4 years ago
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