Question 1

"Junk bonds" are not very desirable because of the low yields these securities provide.

Accepted Answer

A) True 
 B)False

Question 2

In merger terminology,a white knight is:

Accepted Answer

A)   any suitor willing to bid more than the current share price for a firm.
B)   the successful bidder in a merger process.
C)   a suitor who acquires with cash rather than with stock.
D)   a friendly acquirer that will out-bid a hostile acquirer.

Question 3

Briefly discuss some of the more sensible reasons for mergers to occur.

Accepted Answer

The overriding reason for mergers to occ...

Question 4

The merger between Chase Manhattan and Chemical bank is an example of:

Accepted Answer

A)   Vertical merger.
B)   Horizontal merger.
C)   Conglomerate merger.
D)   Direct merger.

Question 5

Changes in corporate charter designed to deter an unwelcome takeover is best defined as:

Accepted Answer

A)   Leveraged Buyout.
B)   Poison Pill.
C)   Shark Repellent.
D)   Proxy Contest.

Question 6

The market for corporate control suggests that:

Accepted Answer

A)   management and ownership make a large difference in a firm's results.
B)   it is rare for mergers to show economic benefits over a sustained period.
C)   hostile takeovers generate the most in additional value.
D)   LBOs cost more than they are worth.

Question 7

Proxy fights are conducted in order to achieve a goal of:

Accepted Answer

A)   changing the corporate charter.
B)   bringing about economies of scale.
C)   replacing the current board and management team.
D)   having a public tender offer.

Question 8

If Microsoft acquires Apple Computer,it will be an example of a:

Accepted Answer

A)   Vertical merger.
B)   Horizontal merger.
C)   Conglomerate merger.
D)   Distribution-channel merger.

Question 9

An acquiring company is considering a takeover of a target company.The acquiring company has 15 million shares outstanding with $30 per share.The target company has 8 million shares outstanding which sell for $24 per share.If the acquiring company estimates that merger gains will be $16 million,determine what the highest price will be paid per share for the target.

Accepted Answer

A)   $24
B)   $26
C)   $28
D)   $30

Question 10

Leveraged buyouts are acquisitions where a large fraction of the purchase price is financed with debt.

Accepted Answer

A) True 
 B)False

Question 11

ABC Corp.has offered one million shares having a total market value of $8 million for XYZ Corp.After the merger is announced,shares in ABC trade for $7 each.If ABC is confident about XYZ's value,what has happened to the cost of the merger?

Accepted Answer

A)   It increases by $1 million
B)   It decreases by $1 million
C)   It increases by $9 million
D)   It remains constant

Question 12

In general,shareholders of the target firm benefit from takeovers.

Accepted Answer

A) True 
 B)False

Question 13

The urge to merge frequently is prompted by more regulation.

Accepted Answer

A) True 
 B)False

Question 14

Who is typically the primary beneficiary(ies)in a merger?

Accepted Answer

While there are certainly exceptions to ...

Question 15

Which of the following motives for mergers make economic sense?

Accepted Answer

A)   To achieve economies of scale
B)   To reduce risk by diversification
C)   Merging to redeploy cash
D)   To increase earnings per share

Question 16

Which of the following is not a takeover defence?

Accepted Answer

A)   Shark repellant
B)   Poison pill
C)   White knight
D)   Proxy contest

Question 17

A spin-off is an action in which:

Accepted Answer

A)   the management bids for and acquires the firm.
B)   one firm issues stock to acquire another firm.
C)   successful product lines are sold to competitors.
D)   a portion of the firm's assets are sold off to form a new company.

Question 18

A "poison pill" is a generous retirement package for current management,implemented after a hostile takeover.

Accepted Answer

A) True 
 B)False

Question 19

Tender offers generally require the approval of the target firm's management.

Accepted Answer

A) True 
 B)False

Question 20

Why might shareholders of an acquiring firm prefer to finance mergers with stock rather than with cash?

Accepted Answer

A)   Stock financing is always less costly due to tax consequences
B)   EPS fall when mergers are financed with cash
C)   Target-firm shareholders will bear part of the cost if merger benefits were overestimated
D)   All merger gains go to the acquirer when financed with stock

Exam 23: Mergers, Acquisitions, and Corporate Control

The market for corporate control suggests that:

Correct Answer
verified

Which of the following motives for mergers make economic sense?

Correct Answer
verified

Leveraged buyouts are acquisitions where a large fraction of the purchase price is financed with debt.

Correct Answer
verified

Tender offers generally require the approval of the target firm's management.

Correct Answer
verified

Who is typically the primary beneficiary(ies)in a merger?

Correct Answer
verified
While there are certainly exceptions to ...
View Answer

Briefly discuss some of the more sensible reasons for mergers to occur.

Correct Answer
verified
The overriding reason for mergers to occ...
View Answer

ABC Corp.has offered one million shares having a total market value of $8 million for XYZ Corp.After the merger is announced,shares in ABC trade for $7 each.If ABC is confident about XYZ's value,what has happened to the cost of the merger?

Correct Answer
verified

Proxy fights are conducted in order to achieve a goal of:

Correct Answer
verified

In general,shareholders of the target firm benefit from takeovers.

Correct Answer
verified

Which of the following is not a takeover defence?

Correct Answer
verified

In merger terminology,a white knight is:

Correct Answer
verified

Correct Answer
verified

A spin-off is an action in which:

Correct Answer
verified

The urge to merge frequently is prompted by more regulation.

Correct Answer
verified

"Junk bonds" are not very desirable because of the low yields these securities provide.

Correct Answer
verified

Changes in corporate charter designed to deter an unwelcome takeover is best defined as:

Correct Answer
verified

A "poison pill" is a generous retirement package for current management,implemented after a hostile takeover.

Correct Answer
verified

Why might shareholders of an acquiring firm prefer to finance mergers with stock rather than with cash?

Correct Answer
verified

If Microsoft acquires Apple Computer,it will be an example of a:

Correct Answer
verified

The merger between Chase Manhattan and Chemical bank is an example of:

Correct Answer
verified

Exam 23: Mergers, Acquisitions, and Corporate Control

The market for corporate control suggests that:

Correct AnswerverifiedShow Answer

Which of the following motives for mergers make economic sense?

Correct AnswerverifiedShow Answer

Leveraged buyouts are acquisitions where a large fraction of the purchase price is financed with debt.

Correct AnswerverifiedShow Answer

Tender offers generally require the approval of the target firm's management.

Correct AnswerverifiedShow Answer

Who is typically the primary beneficiary(ies)in a merger?

Correct AnswerverifiedWhile there are certainly exceptions to ...View AnswerShow Answer

Briefly discuss some of the more sensible reasons for mergers to occur.

Correct AnswerverifiedThe overriding reason for mergers to occ...View AnswerShow Answer

ABC Corp.has offered one million shares having a total market value of $8 million for XYZ Corp.After the merger is announced,shares in ABC trade for $7 each.If ABC is confident about XYZ's value,what has happened to the cost of the merger?

Correct AnswerverifiedShow Answer

Proxy fights are conducted in order to achieve a goal of:

Correct AnswerverifiedShow Answer

In general,shareholders of the target firm benefit from takeovers.

Correct AnswerverifiedShow Answer

Which of the following is not a takeover defence?

Correct AnswerverifiedShow Answer

In merger terminology,a white knight is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A spin-off is an action in which:

Correct AnswerverifiedShow Answer

The urge to merge frequently is prompted by more regulation.

Correct AnswerverifiedShow Answer

"Junk bonds" are not very desirable because of the low yields these securities provide.

Correct AnswerverifiedShow Answer

Changes in corporate charter designed to deter an unwelcome takeover is best defined as:

Correct AnswerverifiedShow Answer

A "poison pill" is a generous retirement package for current management,implemented after a hostile takeover.

Correct AnswerverifiedShow Answer

Why might shareholders of an acquiring firm prefer to finance mergers with stock rather than with cash?

Correct AnswerverifiedShow Answer

If Microsoft acquires Apple Computer,it will be an example of a:

Correct AnswerverifiedShow Answer

The merger between Chase Manhattan and Chemical bank is an example of:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
While there are certainly exceptions to ...
View Answer

Correct Answer
verified
The overriding reason for mergers to occ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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