Assessment of Skills and Knowledge (ASK) in Fundamental Business Concepts Practice Test 2025 - Free Business Concepts Practice Questions and Study Guide

Question: 1 / 400

What is a merger in the business context?

The acquisition of stock from another company

The combination of two companies into a new entity

A merger in the business context refers to the combination of two companies into a new entity. This process typically involves both companies agreed to unite their operations, resources, and management structures to create a single, cohesive organization. The intent behind a merger can include achieving economies of scale, increasing market share, or diversifying products and services, among other strategic objectives.

In contrast, acquiring stock from another company pertains more to ownership stakes and doesn't typically result in creating a new legal entity. The expansion of a company into new markets reflects growth strategies that may or may not involve mergers and is focused on geographic or product line diversification. Selling a company's assets relates to divesting parts of the business rather than combining two companies, which fundamentally differs from the concept of a merger.

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The expansion of a company into new markets

The sale of a company's assets

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