Exam 15: International Corporate Governance and Control

An international acquisition will typically require that the acquirer pay a premium of 30 percent or more for a publicly traded target.

When U.S. firms acquire publically-traded target firms in foreign countries, they would acquire all the shares of the target at a price that is _________ the existing market price per share.

When an MNC acquires a target and knows that it will be able to sell the acquisition at any time during the next three years at a specific price, the MNC has acquired a put option on real assets.

When viewed as a project, an international acquisition usually generates quicker and larger cash flows than the establishment of a new subsidiary, but it also requires a larger initial outlay.

Even aFter an MNC's accept/reject decision of a foreign acquisition has been made, it should be reassessed at various times. In fact, this analysis may indicate that a previously accepted project should be divested.

Which of the following would probably not cause the stock price of a foreign target to decrease?

Which of the following is not true regarding a target's previous cash flows?

Which of the following factors is least likely to cause the required rate of return to vary among MNCs assessing the same foreign target?

The sale of a subsidiary by an MNC is referred to as a divestiture.

Economic conditions in the host country are probably more important for an MNC that intends to use the target to generate revenues in the host country than an MNC that intends to focus on exporting from the target's home country.

A simple method of valuing a private company is to apply the price-earnings ratios of publicly traded firms in the same industry to the private company's earnings.

When a U.S. firm attempts to acquire a target in a country where shareholder rights are weak, it will generally have to pay cash for the shares because the target shareholders will not want to receive stock in the U.S. firm as payment.