1. Which of the following is not a financial motive but rather an operating motive for merger and consolidation?
A. The portfolio diversification effect
B. Tax-loss carryforward
C. Greater financing capability
D. Synergy
2. Mirrlees Corp. has 10,000 7% bonds convertible into 30 shares per $1000 bond. Mirrlees has 1,000,000 outstanding shares. Mirrlees has a tax rate of 40%. The average Aa bond yield at time of issue was 10%. Compute basic earnings per share if after-tax earnings are $1,400,000.
A. $0.71
B. $1.25
C. $1.33
D. $1.40