1. Which of the following is NOT a potential challenge or downside to a merger?
Anti-trust laws
Dilution
Firm valuation
Synergy
2. A firm increases its debt-equity ratio from 1.20 to 1.50. If its return on assets (ROA) remains at 7%, then the firm's
debt ratio must increase by 30%.
return on equity (ROE) must decline by 0.3%.
return on equity (ROE) must increase by 2.1%.
profit margin must increase by 0.3%.