CFA Practice Question

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CFA Practice Question

Assume there are six firms in an industry. Firm A, B, C, D and E each has a 15% market share. Firm F has a share of 25%. Now that firm A is going to merge with firm C. What would be the increase in the HHI as a result of the merger?
A. 0.005
B. 0.01
C. 0.045
Explanation: Pre-merger HHI: 0.152 + 0.152 + 0.152 + 0.152 + 0.152 + 0.252 = 0.175

Post-merger HHI: 0.302 + 0.152 + 0.152 + 0.152 + 0.252 = 0.22

This merger is likely to evoke an antitrust challenge.

User Contributed Comments 2

User Comment
farhan92 i merged first A and F.
nzohoury Me too and I was surprised that wasn't one of the wrong answers. Weak answer choices. I would've gotten it wrong.
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