Which of the following type of merger is most likely to lead to diversification benefits?
A) horizontal merger
B) vertical merger
C) tax free exchange
D) conglomerate

Question

Quizplus · Accepted Answer

A conglomerate merger involves the combination of companies in different industries, which can lead to diversification benefits for the merged entity. This type of merger allows the company to spread risk across different businesses, reducing the impact of any single industry or market downturn. Horizontal and vertical mergers, on the other hand, typically involve companies in the same or related industries, which may not provide as much diversification. A tax-free exchange is a method of exchanging stock or assets without incurring taxes and does not necessarily relate to diversification benefits.

Which of the Following Type of Merger Is Most Likely