The reason behind the higher valuation that the portfolio effect of a merger has on the participating firms. Introduction: Merger: An agreement between two already existing companies that combines them to form one single company is termed as a merger. This is done for the expansion of business, its share in the market and value of shareholders.

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Chapter 20, Problem 3DQ

Summary Introduction

To explain: The reason behind the higher valuation that the portfolio effect of a merger has on the participating firms.

Introduction:

Merger:

An agreement between two already existing companies that combines them to form one single company is termed as a merger. This is done for the expansion of business, its share in the market and value of shareholders.

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