CORFZ01. Qxd 10106 11:0 PM page 464 answer questions at the end of chapter C the signal characteristics of dividends: With asymmetric information dividends can be seen as signals from the companys leaders to shareholders and financial markets. The bond pays interest at 9 percent per year and has a current market price of 90.01. For many businesses mergers and acquisitions are a source of external growth when organic growth is not possible whereas for other companies there is a constant threat to their continued independent existence. A similar change can be noted in the relative preferences of small and large enterprises for different methods of investment valuation. The problem with this rationale is that synergies are difficult to quantify before companies combine and it is difficult to realize when the combination has taken place because this realization is due to a high level of business integration after the merger.CORFZ01.qxd 10106 11:0 PM Page 464 Answers to end-of-chapter questions c Signalling properties of dividends: with asymmetry of information dividends can be seen as signals from the companys managers to shareholders and the financial markets.The bond pays interest of 9 per cent per year and has a current market price of 90.01.For many companies mergers and takeovers are a source of external growth when organic growth is not possible whereas to other companies they represent a constant threat to their continuing independent existence.A similar change can be noted in the relative preferences of small and large companies for different investment appraisal methods.The problem with this justification is that synergy is difficult to quantify before companies combine and difficult to realise once combination has occurred since this realisation depends on a high degree of post-merger corporate integration.