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2 years ago

Evaluate the advantages and disadvantages of horizontal, vertical and conglomerate mergers.

1 answer:

7 0

Some of the advantages are related to increased market share and product diversification, while the disadvantages are less flexibility and culture shock.

<h3 /><h3>What is an organizational merger?</h3>

Occurs in the legal merger of two or more companies with the aim of forming a new organization.

The horizontal merger occurs between two competitors, the vertical between a buyer and a seller, and the merger of conglomerates occurs in companies from different areas of activity.

Therefore, despite the advantages of increasing market value and positioning, the merger between companies can be a risky strategy if it is not established in a planned way.

Find out more about organizational merger here:

brainly.com/question/8126554

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4 years ago

Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and de

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Answer:

A). Decrease the money supply so interest rates rise.

Explanation:

This could be explained simply because change in money supply results in changes in price levels and/or a change in supply of goods and services. An increase in money supply results in a decrease in the value of money because an increase in money supply causes a rise in inflation. As inflation rises, the purchasing power, or the value of money, decreases.

A change in interest rates is one way to make that correspondence happen. A fall in interest rates increases the amount of money people wish to hold, while a rise in interest rates decreases that amount. A change in prices is another way to make the money supply equal the amount demanded.

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3 years ago

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B psychological needs

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3 years ago

Two companies are financed as follows: X Co. Y Co. Bonds payable, 9% issued at face $5,000,000 $3,000,000 Common stock, $25 par

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Answer:

The Earnings per Share on Common Stock X Co. $ Y Co is $9.15 and $10.05 respectively.

Explanation:

To compute the earning per share, first we have to calculate the net income and number of outstanding shares.

In mathematically,

Earning per share = Net income ÷ Number of outstanding shares

where,

Net income = Income before bond interest and income taxes - interest - tax

where,

Interest = Bonds × Rate

Tax = income tax rate × remaining balance

whereas, number of outstanding shares = Common stock ÷ price of shares

So,

For X,

The net income is = $2,280,000 - ($5,000,000 × 9%) - (40% of remaining balance)

= $2,280,000 - $450,000 - $732,000

= $1,098,000

And, Number of outstanding shares = 3,000,000 ÷ $25 = 120,000

So, Earning per share for X is

= $1,098,000 ÷ 120,000 = $9.15

For Y,

The net income is = $2,280,000 - ($3,000,000 × 9%) - (40% of remaining balance)

= $2,280,000 - $270,000 - $804,000

= $1,206,000

And, Number of outstanding shares = 3,000,000 ÷ $25 = 120,000

So, Earning per share for X is

= $1,206,000 ÷ 120,000 = $10.05

Hence, the Earnings per Share on Common Stock X Co. $ Y Co is $9.15 and $10.05 respectively.

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3 years ago

A stock has an expected return of 13 percent, its beta is 1.80, and the expected return on the market is 9.5 percent. What must

Novosadov [1.4K]

Answer:

The answer is 5.13percent

Explanation:

The formula to be used here is from Capital Asset Pricing Model (CAPM) and it is used to determine the cost of equity or the expected return on a company's equity.

The formula is

Ke = Rf + beta(Rm - Rf)

Where Ke is Cost of equity(13 percent)

Rf is the risk free rate of return

Rm is the market risk(9.5 percent)

beta = 1.80

To solve for Rf;

0.13 = Rf + 1.8(0.095 - Rf)

0.13 = Rf + 0.171 - 1.8Rf

0.13 - 0.171 = Rf - 1.8Rf

-0.041 = -0.8Rf

Rf = 0.041 ÷ 0.8

=0.0513

5.13percent

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3 years ago