Question: Firms AFD TYU CHG and LAN are competitors within an
Firms AFD, TYU, CHG, and LAN are competitors within an industry. Their respective sales figures are $2.8 billion, $3.9 billion, $4.8 billion, and $2.1 billion. What is the Herfindahl Index (HI) for the industry? Is the industry considered highly concentrated, moderately concentrated, or not concentrated? Assuming that two more firms—QBC ($3.6 billion in sales) and RTY ($2.7 billion in sales)—are added to the industry figures, does the concentration level of the industry change? (Recompute HI to determine this.) If the three smallest firms (AFD, LAN, and RTY) merged, would the FTC be concerned? If so, why? (The HI is measured in units of %2. For example, 50% × 50% = 2,500%2 (or, in decimal form, 0.50 × 0.50 = 0.25). To make the conversion from decimal to percentage form mathematically, multiply the answer by 10,000; using the same example, this yields 0.50 × 0.50 × 10,000 = 2,500.)
Relevant QuestionsBogey Inc. (BOG), with a share price of $36 and EPS of $3, purchases Zoe Corp., with a pre-acquisition share price of $20 and EPS of $2, for a 10% premium. If the deal is financed exclusively with BOG equity and no material ...A given market was initially segmented evenly among 20 firms (Phase 1). Five years later, the market was still segmented evenly among competing firms, but there were now only 10 firms (Phase 2). Eventually six firms emerged ...What are the advantages and disadvantages of a voluntary workout to resolve financial distress? What are the advantages and disadvantages of declaring bankruptcy to resolve financial distress? Keck Business Forms recently failed and will be liquidated by a court-appointed trustee who will charge $300,000 for her services. The preliquidation balance sheet follows. Assume that the trustee liquidates the assets for ...Distinguish between the motivations for purchasing insurance and the motivations for hedging market-wide sources of risk.
Post your question