Filters
Question type
Study Flashcards

If an acquirer wishes to keep the identity of a target after the acquisition,it most likely will seek a


A) statutory merger.
B) subsidiary merger.
C) consolidation.
D) none of the above allow the target to keep a separate identity.

E) None of the above
F) All of the above

Correct Answer

verifed

verified

Strategic rationales for mergers include:


A) the ability to more closely monitor product quality.
B) defensive consolidation in a mature or declining industry
C) economics of scale
D) synergy
E) All of the above

F) A) and D)
G) A) and E)

Correct Answer

verifed

verified

Bavarian-Bavarian Merger Bavarian Brew is planning on acquiring Bavarian Sausage in a pure exchange merger. Bavarian Brew's stock is currently trading at $45 and they set the exchange ratio at 1.80. Bavarian Sausage has 75 million shares outstanding which are currently trading at $23 a share. Twelve months after the merger Bavarian Brew's stock price drops to $37. -After the drop in the stock price for Bavarian Brew,what is the transaction value of the merger?


A) $4.995 billion
B) $2.775 billion
C) $3.585 billion
D) $5.239 billion

E) B) and D)
F) A) and B)

Correct Answer

verifed

verified

A

Bavarian-Bavarian Merger Bavarian Brew is planning on acquiring Bavarian Sausage in a pure exchange merger. Bavarian Brew's stock is currently trading at $45 and they set the exchange ratio at 1.80. Bavarian Sausage has 75 million shares outstanding which are currently trading at $23 a share. Twelve months after the merger Bavarian Brew's stock price drops to $37. -How many shares will Bavarian Brew issue in the exchange offer?


A) 75 million
B) 135 million
C) 95 million
D) 150 million

E) C) and D)
F) None of the above

Correct Answer

verifed

verified

Backward integration is a type of


A) horizontal merger.
B) vertical merger.
C) market power merger.
D) none of the above.

E) B) and D)
F) A) and B)

Correct Answer

verifed

verified

A change in corporate control brought about by the creation of new shares with special voting rights is a(n)


A) management buyout.
B) employee stock ownership plan.
C) dual-class recapitalization.
D) Florida.

E) All of the above
F) B) and D)

Correct Answer

verifed

verified

If GM were to merge with Wal-Mart,this would be called a


A) vertical merger
B) product extension merger
C) pure conglomerate merger
D) none of the above

E) B) and C)
F) C) and D)

Correct Answer

verifed

verified

When a subsidiary of the bidder merges with the target firm


A) subsidiary merger
B) statutory merger
C) Subsidiary merger
D) reverse triangle merger
E) consolidation

F) C) and D)
G) A) and E)

Correct Answer

verifed

verified

Corporate control refers to what aspect of a corporation or business organization?


A) monitoring
B) supervision
C) direction
D) all of the above

E) All of the above
F) B) and C)

Correct Answer

verifed

verified

Which of the following is a means of changing corporate control?


A) merger
B) management buyout
C) proxy contest
D) all of the above

E) All of the above
F) None of the above

Correct Answer

verifed

verified

You are analyzing the potential acquisition of Nothing Better! Ice Creams, Inc. by your firm, Needsalift, Inc. The ice cream firm is a wholly owned subsidiary of Grand Lake Investments, which has set a firm selling price of $10,000,000. From your work you estimate that Nothing Better! will generate the following incremental cash flows for Needsalift: You are analyzing the potential acquisition of Nothing Better! Ice Creams, Inc. by your firm, Needsalift, Inc. The ice cream firm is a wholly owned subsidiary of Grand Lake Investments, which has set a firm selling price of $10,000,000. From your work you estimate that Nothing Better! will generate the following incremental cash flows for Needsalift: To fund the $10 million price, Needsalift can use $2 million from internal sources (retained earnings) with a required return of 15 percent, while the rest would come from a new debt issue yielding 10 percent. Needsalift's tax rate is 40 percent. -What is the value of the proposed acquisition to Needsalift? A) $9,771,379 B) $10,666,344 C) $8,500,678 D) $10,596,175 To fund the $10 million price, Needsalift can use $2 million from internal sources (retained earnings) with a required return of 15 percent, while the rest would come from a new debt issue yielding 10 percent. Needsalift's tax rate is 40 percent. -What is the value of the proposed acquisition to Needsalift?


A) $9,771,379
B) $10,666,344
C) $8,500,678
D) $10,596,175

E) None of the above
F) A) and C)

Correct Answer

verifed

verified

Bavarian-Bavarian Merger Bavarian Brew is planning on acquiring Bavarian Sausage in a pure exchange merger. Bavarian Brew's stock is currently trading at $45 and they set the exchange ratio at 1.80. Bavarian Sausage has 75 million shares outstanding which are currently trading at $23 a share. Twelve months after the merger Bavarian Brew's stock price drops to $37. -After the drop in the stock price for Bavarian Brew,what is the control premium?


A) 252.0%
B) 189.6%
C) 52.6%
D) 124.4%

E) All of the above
F) A) and B)

Correct Answer

verifed

verified

Smart Products Suppose Smart Products has three divisions which contribute 40, 35, and 25 percent each to its revenues. -Now suppose Smart Products acquires a competitor of one of its divisions and the new shares of revenues are 60,25,and 15 percent.Is Smart Products more or less focused?


A) less focused; the HI increases to 0.445
B) less focused; the HI decreases to 0.25
C) more focused; the HI decreases to 0.25
D) more focused; the HI increases to 0.445

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

The suggestion that poorly monitored managers will pursue mergers to maximize their corporation's asset size because managerial compensation is usually based on firm size is called


A) the managerialism theory of managers.
B) the concept of unintended consequences.
C) the untrustable manager theory of managers.
D) none of the above.

E) None of the above
F) B) and D)

Correct Answer

verifed

verified

When a parent company creates a new company with its own shares by issuing shares of that company which used to be a division or subsidiary of the parent company,the transaction is called


A) a divestiture.
B) a reverse split.
C) a spin-off.
D) none of the above

E) None of the above
F) B) and D)

Correct Answer

verifed

verified

The first U.S.merger wave,in 1897 was largely the result of


A) a backlash created by the anti-trust legislation of the 1890's.
B) industrialization.
C) a growing emphasis on a truly national economy rather than a grouping of regional economies.
D) none of the above.

E) B) and C)
F) None of the above

Correct Answer

verifed

verified

Smart Products Suppose Smart Products has three divisions which contribute 40, 35, and 25 percent each to its revenues. -What is Smart Products' Herfindahl Index on focus?


A) 1.0
B) 0.40
C) 0.345
D) 0.333

E) All of the above
F) B) and C)

Correct Answer

verifed

verified

C

Which of the following anti-takeover measures may actually help align manager and shareholder interests?


A) super majority votes
B) pac man defense
C) golden parachutes
D) staggered director elections

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

C

Smart Acquires Snazzy Smart Products plans to acquire Snazzy Snaps, which will create $8 million in incremental cash flows for Smart each year for the first six years. Smart Products plans to divest Snazzy Snaps at the end of the sixth year for $112,500,000. Smart's beta (b) is 1.2, and is expected to remain so after the acquisition. The risk free rate is 5 percent and the expected return on the market is 16 percent. Smart Products has a 100 percent equity capital structure which will be maintained post-acquisition. -Refer to Smart Acquires Snazzy.What is Smart Products' cost of equity?


A) 24.2%
B) 18.2%
C) 16.0%
D) 11.0%

E) A) and D)
F) B) and C)

Correct Answer

verifed

verified

In the periods 2000-2010 the abnormal returns for the bidding firm was


A) -8.23%
B) -1.65%
C) 21.92%
D) 2.68%

E) A) and D)
F) B) and C)

Correct Answer

verifed

verified

Showing 1 - 20 of 100

Related Exams

Exam 1

The Scope of Corporate Finance

92 Questions

Exam 2

Financial Statement and Cash Flow Analysis

104 Questions

Exam 3

The Time Value of Money

145 Questions

Exam 4

Valuing Bonds

114 Questions

Exam 5

Valuing Stocks

109 Questions

Exam 6

The Trade-Off Between Risk and Return

91 Questions

Exam 7

Risk, return, and the Capital Asset Pricing Model

88 Questions

Exam 8

Capital Budgeting Process and Decision Criteria

94 Questions

Exam 9

Cash Flow and Capital Budgeting

98 Questions

Exam 10

Risk and Capital Budgeting

97 Questions

Exam 11

Raising Long-Term Financing

101 Questions

Exam 12

Capital Structure

101 Questions

Exam 13

Long-Term Debt and Leasing

103 Questions

Exam 14

Payout Policy

103 Questions

Exam 15

Financial Planning

95 Questions

Exam 16

Cash Conversion, inventory, and Receivables Management

105 Questions

Exam 17

Cash, payables, and Liquidity Management

104 Questions

Exam 18

International Financial Management

99 Questions

Exam 19

Options

98 Questions

Exam 20

Entrepreneurial Finance and Venture Capital

94 Questions

Exam 22

Bankruptcy and Financial Distress

97 Questions

Exam 23

Risk Management

83 Questions

Show Answer