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1. What is the free rider problem that can result from a merger?

2. How does a currency forward contract allow a firm to reduce risks?

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Free rider problem and currency

1. What is the free rider problem that can result from a merger?
The free rider problem that can result from a merger is that there are small shareholders that do not make effort or incur costs to monitor management performance. They free-ride on the monitoring efforts of other shareholders and still earn the benefits from performance improvements. Similarly, during the merger process smaller shareholders do not tender any offer price below the higher expected price that ...

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Hatim Baxamusa, MBA
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  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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