1. Shareholders value firms based on their

A. sizes.

B. profits.

C. original costs.

D. depreciated values.

E. market values.

2. Synergy is created in an acquisition only if the

A. value of the combined firm exceeds the sum of the individual firm's separate values.

B. acquisition is an all-cash transaction at the current market value of the target firm.

C. acquisition increases revenues while also reducing cash costs.

D. acquisition is a tax-free transaction.

E. value of the shares exchanged equal the market value of the target firm's shares.