1. The target firm has a low debt level: This can contribute to increasing debt capacity after a merger because it means the combined company will have less total debt than if the target firm had a high debt level. This could potentially allow the merged company to take on more debt if needed.

2. Risk-averse management: This might not directly contribute to increasing debt capacity. However, if management is risk-averse, they may be more likely to manage the company's finances in a way that maintains a healthy debt capacity.

3. The target firm has a high debt level: This would generally not contribute to increasing debt capacity after a merger. In fact, it could potentially decrease the merged company's debt capacity because the combined company would have a higher total debt level.

4. A merger can decrease the debt risk level: This can contribute to increasing debt capacity after a merger. If the merger results in a more diversified or stable company, the company's risk of defaulting on its debt may decrease. This could potentially allow the company to safely take on more debt.

So, the options that contribute to increasing debt capacity after a merger are "the target firm has a low debt level" and "a merger can decrease the debt risk level".

Question

1. The target firm has a low debt level: This can contribute to increasing debt capacity after a merger because it means the combined company will have less total debt than if the target firm had a high debt level. This could potentially allow the merged company to take on more debt if needed.

2. Risk-averse management: This might not directly contribute to increasing debt capacity. However, if management is risk-averse, they may be more likely to manage the company's finances in a way that maintains a healthy debt capacity.

3. The target firm has a high debt level: This would generally not contribute to increasing debt capacity after a merger. In fact, it could potentially decrease the merged company's debt capacity because the combined company would have a higher total debt level.

4. A merger can decrease the debt risk level: This can contribute to increasing debt capacity after a merger. If the merger results in a more diversified or stable company, the company's risk of defaulting on its debt may decrease. This could potentially allow the company to safely take on more debt.

So, the options that contribute to increasing debt capacity after a merger are "the target firm has a low debt level" and "a merger can decrease the debt risk level".

Knowee AI · Accepted Answer

1. The target firm has a low debt level: This can contribute to increasing debt capacity after a merger because it means the combined company will have less total debt than if the target firm had a high debt level. This could potentially allow the merged company to take on more debt if needed.

2. Risk-averse management: This might not directly contribute to increasing debt capacity. However, if management is risk-averse, they may be more likely to manage the company's finances in a way that maintains a healthy debt capacity.

3. The target firm has a high debt level: This would generally not contribute to increasing debt capacity after a merger. In fact, it could potentially decrease the merged company's debt capacity because the combined company would have a higher total debt level.

4. A merger can decrease the debt risk level: This can contribute to increasing debt capacity after a merger. If the merger results in a more diversified or stable company, the company's risk of defaulting on its debt may decrease. This could potentially allow the company to safely take on more debt.

So, the options that contribute to increasing debt capacity after a merger are "the target firm has a low debt level" and "a merger can decrease the debt risk level".

Which of the following contributes to increasing debt capacity after a merger?Multiple select question.the target firm has a low debt levelrisk-averse managementthe target firm has a high debt levela merger can decrease the debt risk level

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