📊 GMAT Exam Prep

A financial analyst recommends investing in Company X, stating that its recent merger with Company Y will lead to significant cost savings. The analyst's recommendation relies on which of the following assumptions?

A Company X and Company Y had overlapping operational functions that can be consolidated.
B The stock market will generally perform well in the coming year.
C Company X's management is competent in integrating new acquisitions.
D There will be no unforeseen legal challenges resulting from the merger.

✓ Correct Answer: Option A

For a merger to lead to 'significant cost savings,' there must be areas where operations can be combined or reduced. The unstated assumption is that such overlapping functions exist and can be efficiently consolidated.

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