n NISM Certifications
XV NISM Series XV
Medium

When two companies combine to form a new company and the previous companies cease to exist, what is this process called?

Practice question from NISM XV Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Merger

  2. B

    Acquisition

  3. Consolidation

    Correct answer

  4. D

    Takeover

Why this is the answer

Consolidation involves combining two or more companies into a new entity, with the original companies ceasing to exist. In mergers or acquisitions, one company may survive, and in takeovers, one company purchases another without forming a new entity.

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