When Investors Accept Lower Returns on their Investments-Multiple Choice Question

Question

Indicate as to whether the following statements are correct (yes) or incorrect (no):

Due to synergy (economies of scale incubated through merger) the merged Firm-AB would have greater levels of growth rates, lower levels of shrinkage rates, greater levels of probability of growth, lower levels of probability of shrinkage, and lower levels of cost of capital rate (bondholders and stockholders perceive the new merged-firm to be less risky; and, hence are willing to accept lower returns on their investments (bonds and stocks).

a) True b) False