Which of the Following Statements Is False

Which of the following statements is false?

A) All else being equal, larger firms, because they are more diversified, have an increased probability of bankruptcy.
B) To justify a takeover based on operating losses, management would have to argue that the tax savings are over and above what the firm would save using carryback and carryforward provisions.
C) It is possible to combine two companies with the result that the earnings per share of the merged company exceed the premerger earnings per share of either company, even when the merger itself creates no economic value.
D) When an acquirer buys a private target, it provides the target's owners with a way to reduce their risk exposure by cashing out their investment in the private target and reinvesting in a diversified portfolio.

Correct Answer:

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