Question 1

In a share exchange,the separate legal existence of one of the corporations ceases.

Accepted Answer

A) True 
 B)False

Question 2

Should shareholders encourage responsibility of corporations in which they invest,or should investors make those judgments by the choices of companies in which to invest? Which approach is more effective?

Accepted Answer

There is no clear answer to wh

Question 3

If a corporation's shareholders are supposed to have ultimate control over the corporation,is it appropriate for management to get involved in proxy contests among shareholders? Under what circumstances is it most appropriate for management to get involved?

Accepted Answer

In many cases,members of management are

Question 4

The articles of incorporation or corporate bylaws can require the approval of a surpramajority to approve a merger.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following best describes a share exchange?

Accepted Answer

A)  Two corporations jointly purchase a third corporation and operate it as a joint venture. 
B)  Two corporations are combined to form a new third corporation,and the original two corporations cease to exist. 
C)  Two corporations are combined,with one of the original corporations surviving and the other ceasing to exist. 
D)  One corporation acquires all of the shares of a second corporation,with both corporations retaining their separate legal existence,the second a subsidiary of the first. 
E)  One corporation sells substantially all of its assets to a second corporation,with both corporations retaining their separate legal existence. 
A)  Two corporations jointly purchase a third corporation and operate it as a joint venture. 
B)  Two corporations are combined to form a new third corporation,and the original two corporations cease to exist. 
C)  Two corporations are combined,with one of the original corporations surviving and the other ceasing to exist. 
D)  One corporation acquires all of the shares of a second corporation,with both corporations retaining their separate legal existence,the second a subsidiary of the first. 
E)  One corporation sells substantially all of its assets to a second corporation,with both corporations retaining their separate legal existence.

Question 6

In determining whether antitakeover tactics are legal,the management must show that the actions taken were reasonable in relation to the threat posed,and that there was a danger to:

Accepted Answer

A)  corporate policy and effectiveness 
B)  the best interests of the corporation and its shareholders 
C)  the national economy 
D)  Both A and B must be shown. 
E)  Both A and C must be shown. 
A)  corporate policy and effectiveness 
B)  the best interests of the corporation and its shareholders 
C)  the national economy 
D)  Both A and B must be shown. 
E)  Both A and C must be shown.

Question 7

Which of the following is not a correct description of a defensive strategy to a tender offer?

Accepted Answer

A)  Selling a crown jewel refers to a sale by the target corporation of an asset that was particularly attractive to the tender offeror. 
B)  A white knight merger refers to a merger with a different purchaser that is friendlier toward management than the company that made the tender offer. 
C)  A poison pill is a strategy built into contracts,bylaws,and so forth,that can make any purchase of the corporation more expensive,such as leases that automatically expire upon the purchase and would require renegotiation,likely at a higher price. 
D)  Under a standstill agreement,shareholders holding a large number of shares of the target corporation agree that none of them will sell to the tender offeror,even if the tender offeror raises the offer price. 
E)  A greenmail payment is a payment,usually at greater than fair market value,made by the target corporation to the tender offeror for shares already owned by the tender offeror in exchange for the tender offeror dropping the tender offer. 
A)  Selling a crown jewel refers to a sale by the target corporation of an asset that was particularly attractive to the tender offeror. 
B)  A white knight merger refers to a merger with a different purchaser that is friendlier toward management than the company that made the tender offer. 
C)  A poison pill is a strategy built into contracts,bylaws,and so forth,that can make any purchase of the corporation more expensive,such as leases that automatically expire upon the purchase and would require renegotiation,likely at a higher price. 
D)  Under a standstill agreement,shareholders holding a large number of shares of the target corporation agree that none of them will sell to the tender offeror,even if the tender offeror raises the offer price. 
E)  A greenmail payment is a payment,usually at greater than fair market value,made by the target corporation to the tender offeror for shares already owned by the tender offeror in exchange for the tender offeror dropping the tender offer.

Question 8

If a company that is the target of a hostile tender offer locates another corporation that will be friendlier to management and agrees to be taken over by this second company,this action is often referred to as:

Accepted Answer

A)  a reverse tender offer 
B)  a greenmail payment 
C)  the selling of a crown jewel 
D)  adopting a poison pill 
E)  a white knight merger 
A)  a reverse tender offer 
B)  a greenmail payment 
C)  the selling of a crown jewel 
D)  adopting a poison pill 
E)  a white knight merger

Question 9

The dissenting shareholder appraisal right allows a shareholder to request appraisal of the shares to be acquired in a merger,and the tender offer price will be adjusted based on the appraisal.

Accepted Answer

A) True 
 B)False

Question 10

A short-form merger is a simplified form of merger that can be used so long as more than 90 percent of the shareholders of both corporations approve of the transaction in advance.

Accepted Answer

A) True 
 B)False

Question 11

Once a shareholder has tendered his or her shares,he or she may not withdraw them before the closing of the tender offer.

Accepted Answer

A) True 
 B)False

Question 12

In an ordinary merger,what approvals are needed?

Accepted Answer

A)  Recommendation by both boards of directors and votes of the shareholders of each corporation. 
B)  Votes by both boards of directors,but shareholders need not approve. 
C)  Vote by the board of directors of the surviving corporation,and for the corporation that does not survive,recommendation by the board of directors and vote by the shareholders. 
D)  For both corporations,a vote by the shareholders,but no action by the board of directors. 
E)  No approvals needed by the surviving corporation,and for the corporation that does not survive,recommendation by the board of directors and vote by the shareholders. 
A)  Recommendation by both boards of directors and votes of the shareholders of each corporation. 
B)  Votes by both boards of directors,but shareholders need not approve. 
C)  Vote by the board of directors of the surviving corporation,and for the corporation that does not survive,recommendation by the board of directors and vote by the shareholders. 
D)  For both corporations,a vote by the shareholders,but no action by the board of directors. 
E)  No approvals needed by the surviving corporation,and for the corporation that does not survive,recommendation by the board of directors and vote by the shareholders.

Question 13

If a group desires to solicit proxies to oppose a management action,management has the choice of mailing the proxy materials for the dissenting group or providing the dissenting group with a list of shareholders.

Accepted Answer

A) True 
 B)False

Question 14

A shareholder may present an issue on a proxy for a vote by the shareholders only if the management agrees with the proposal.

Accepted Answer

A) True 
 B)False

Question 15

A shareholder exercising her appraisal right can petition the court to determine the value of shares if she believes that the corporation has set the value too low.

Accepted Answer

A) True 
 B)False

Question 16

A proxy statement must include information about which of the following?

Accepted Answer

A)  who is soliciting the proxy and the matter for which the proxy is being solicited 
B)  who is soliciting the proxy and the estimated likelihood that the matter will be approved 
C)  who is soliciting the proxy and the number of proxies already executed on the matter 
D)  who is soliciting the proxy and pro forma financial statements assuming that the matter for which the proxy is sought is approved 
A)  who is soliciting the proxy and the matter for which the proxy is being solicited 
B)  who is soliciting the proxy and the estimated likelihood that the matter will be approved 
C)  who is soliciting the proxy and the number of proxies already executed on the matter 
D)  who is soliciting the proxy and pro forma financial statements assuming that the matter for which the proxy is sought is approved

Question 17

What is required in order for a merger to be conducted under the short-form merger procedure?

Accepted Answer

A)  An increase of less than 20 percent in the number of outstanding shares of the surviving corporation is required. 
B)  Agreement by both boards of directors to use the short-form procedure is required. 
C)  Approval by the Securities and Exchange Commission to use the short-form procedure is required. 
D)  Ownership by the surviving parent corporation of at least 90 percent of the shares of the nonsurviving (subsidiary) corporation prior to the merger is required. 
E)  The sale,prior to the merger,by the nonsurviving corporation of all its noncash assets is required. 
A)  An increase of less than 20 percent in the number of outstanding shares of the surviving corporation is required. 
B)  Agreement by both boards of directors to use the short-form procedure is required. 
C)  Approval by the Securities and Exchange Commission to use the short-form procedure is required. 
D)  Ownership by the surviving parent corporation of at least 90 percent of the shares of the nonsurviving (subsidiary) corporation prior to the merger is required. 
E)  The sale,prior to the merger,by the nonsurviving corporation of all its noncash assets is required.

Question 18

A proxy holder may be a director or officer of the corporation.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following corporate transactions requires the approval of a majority of the shareholders of the corporation planning to undertake the transaction?

Accepted Answer

A)  merger 
B)  tender offer 
C)  sale of assets in the normal course of business 
D)  A,B,and C 
A)  merger 
B)  tender offer 
C)  sale of assets in the normal course of business 
D)  A,B,and C

Question 20

A poison pill refers to a target company in a hostile takeover selling off valuable pieces of itself to make itself less attractive to the potential buyer.

Accepted Answer

A) True 
 B)False

Exam 38: Corporate Acquisitions and Multinational Corporations

In a share exchange,the separate legal existence of one of the corporations ceases.

Should shareholders encourage responsibility of corporations in which they invest,or should investors make those judgments by the choices of companies in which to invest? Which approach is more effective?

If a corporation's shareholders are supposed to have ultimate control over the corporation,is it appropriate for management to get involved in proxy contests among shareholders? Under what circumstances is it most appropriate for management to get involved?

The articles of incorporation or corporate bylaws can require the approval of a surpramajority to approve a merger.

Which of the following best describes a share exchange?

In determining whether antitakeover tactics are legal,the management must show that the actions taken were reasonable in relation to the threat posed,and that there was a danger to:

Which of the following is not a correct description of a defensive strategy to a tender offer?

If a company that is the target of a hostile tender offer locates another corporation that will be friendlier to management and agrees to be taken over by this second company,this action is often referred to as:

The dissenting shareholder appraisal right allows a shareholder to request appraisal of the shares to be acquired in a merger,and the tender offer price will be adjusted based on the appraisal.

A short-form merger is a simplified form of merger that can be used so long as more than 90 percent of the shareholders of both corporations approve of the transaction in advance.

Once a shareholder has tendered his or her shares,he or she may not withdraw them before the closing of the tender offer.

In an ordinary merger,what approvals are needed?

If a group desires to solicit proxies to oppose a management action,management has the choice of mailing the proxy materials for the dissenting group or providing the dissenting group with a list of shareholders.

A shareholder may present an issue on a proxy for a vote by the shareholders only if the management agrees with the proposal.

A shareholder exercising her appraisal right can petition the court to determine the value of shares if she believes that the corporation has set the value too low.

A proxy statement must include information about which of the following?

What is required in order for a merger to be conducted under the short-form merger procedure?

A proxy holder may be a director or officer of the corporation.

Which of the following corporate transactions requires the approval of a majority of the shareholders of the corporation planning to undertake the transaction?

A poison pill refers to a target company in a hostile takeover selling off valuable pieces of itself to make itself less attractive to the potential buyer.

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