Question 1

In a(n) ____ common stock in a division or subsidiary is distributed to shareholders of the parent company on a pro rata basis.

Accepted Answer

A)  spin-off 
B)  reverse LBO 
C)  equity carve-out 
D)  tender offer 
A)  spin-off 
B)  reverse LBO 
C)  equity carve-out 
D)  tender offer

Question 2

Which of the following terms are not associated with mergers and acquisitions?

Accepted Answer

A)  white knight 
B)  tender offers 
C)  greenmail 
D)  declaration of bankruptcy 
A)  white knight 
B)  tender offers 
C)  greenmail 
D)  declaration of bankruptcy

Question 3

Linpro Industries is considering the acquisition of Odetics, Inc. in a stock-for-stock exchange. Assume no immediate synergistic benefits are expected. Selected financial data on the two companies are shown below:  
Calculate Linpro's postmerger EPS if the Odetics shareholders accept an offer of $90 a share in a stock-for-stock exchange.

Accepted Answer

A)  $4.38 
B)  $4.29 
C)  $3.42 
D)  $3.81 
A)  $4.38 
B)  $4.29 
C)  $3.42 
D)  $3.81

Question 4

Essex Industries is considering the acquisition of the Twinsburg Company in a stock-for-stock exchange. The following financial data are available on both companies. (Assume no synergy is expected with this merger.) Calculate answers to nearest 0.001.
  
-Calculate the post-merger earnings per share if the exchange ratio is 0.4 shares of Essex for each share of Twinsburg. (Assume total post-merger earnings are $43,740,000).

Accepted Answer

A)  $8.10 
B)  $7.33 
C)  $7.29 
D)  $7.42 
A)  $8.10 
B)  $7.33 
C)  $7.29 
D)  $7.42

Question 5

In the ____ method of combining financial accounts in a merger, the acquired company's assets are recorded on the acquiring company's books at their cost (net of depreciation) when originally acquired.

Accepted Answer

A)  goodwill consolidation 
B)  purchase 
C)  pooling of interests 
D)  EVA 
A)  goodwill consolidation 
B)  purchase 
C)  pooling of interests 
D)  EVA

Question 6

Buggy Whip Industries is being liquidated under Chapter 7 of the bankruptcy code. When it filed for bankruptcy, its balance sheet was a follows:  
*Bank loan is unsecured
**Mortgage bonds are secured by land and buildings
Assume that the liquidation is a voluntary petition, that no unpaid contributions to employee benefit plans exist, and that no customer layaway deposits are involved. The proceeds from the liquidation of the company's assets are as follows:
 
Bankruptcy administration charges are $2,500,000. Determine the amount that the mortgage bondholders will receive in this liquidation.

Accepted Answer

A)  $5,000,000 
B)  $6,500,000 
C)  $8,000,000 
D)  $10,500,000 
A)  $5,000,000 
B)  $6,500,000 
C)  $8,000,000 
D)  $10,500,000

Question 7

A plan of reorganization must be all of the following EXCEPT:

Accepted Answer

A)  feasible 
B)  fair 
C)  a plan that allows the firm a chance to reestablish successful business operations 
D)  a plan whereby the creditors that are due the most money are paid first. 
A)  feasible 
B)  fair 
C)  a plan that allows the firm a chance to reestablish successful business operations 
D)  a plan whereby the creditors that are due the most money are paid first.

Question 8

A bond that contains a put option that can be exercised only if an unfriendly takeover occurs, is an example of a ____ .

Accepted Answer

A)  pacman defense 
B)  liability restructuring 
C)  poison pill 
D)  standstill option 
A)  pacman defense 
B)  liability restructuring 
C)  poison pill 
D)  standstill option

Question 9

A combination of two or more companies in which neither competes directly with the other and no buyer-seller relationship exists is known as a

Accepted Answer

A)  conglomerate merger 
B)  vertical merger 
C)  horizontal merger 
D)  takeover 
A)  conglomerate merger 
B)  vertical merger 
C)  horizontal merger 
D)  takeover

Question 10

Endevco is considering the acquisition of Geothermal Resources in a stock-for-stock exchange. Assume no immediate synergistic benefits are expected. Selected financial data on the two companies are shown below:  
If Endevco is not willing to incur an initial dilution in its EPS, and if Endevco also feels that it will have to offer Geothermal shareholders a minimum of 20% over Geothermal's current market price, what is the maximum price per share that Endevco will have to pay for Geothermal's stock?

Accepted Answer

A)  $57.60 
B)  $64.33 
C)  $52.23 
D)  $60.00 
A)  $57.60 
B)  $64.33 
C)  $52.23 
D)  $60.00

Question 11

How does a joint venture differ from a holding company?

Accepted Answer

A holding company occurs when an acquiri

Question 12

A firm is technically insolvent when: it is unable to meet it current obligations and:

Accepted Answer

A)  the value of its assets exceeds the value of its liabilities. 
B)  the value of its assets is less than the value of its liabilities. 
C)  it files a bankruptcy petition. 
D)  it merges with another firm. 
A)  the value of its assets exceeds the value of its liabilities. 
B)  the value of its assets is less than the value of its liabilities. 
C)  it files a bankruptcy petition. 
D)  it merges with another firm.

Question 13

Essex Industries is considering the acquisition of the Twinsburg Company in a stock-for-stock exchange. The following financial data are available on both companies. (Assume no synergy is expected with this merger.) Calculate answers to nearest 0.001.
  
-Calculate the exchange ratio if Essex offers the Twinsburg stockholders a 20% premium over Twinsburg's current market price.

Accepted Answer

A)  0.375 
B)  2.22 
C)  0.45 
D)  0.288 
A)  0.375 
B)  2.22 
C)  0.45 
D)  0.288

Question 14

One anti-takeover measure is the ____, where the target company makes a takeover bid for the stock of the bidder.

Accepted Answer

A)  poison put 
B)  black knight defense 
C)  pacman defense 
D)  shark repellent 
A)  poison put 
B)  black knight defense 
C)  pacman defense 
D)  shark repellent

Question 15

What are some informal alternatives for salvaging a failing business?

Accepted Answer

1. The company can stretch its payables.

In a(n) ____ common stock in a division or subsidiary is distributed to shareholders of the parent company on a pro rata basis.

Which of the following terms are not associated with mergers and acquisitions?

In the ____ method of combining financial accounts in a merger, the acquired company's assets are recorded on the acquiring company's books at their cost (net of depreciation) when originally acquired.

A plan of reorganization must be all of the following EXCEPT:

A bond that contains a put option that can be exercised only if an unfriendly takeover occurs, is an example of a ____ .

A combination of two or more companies in which neither competes directly with the other and no buyer-seller relationship exists is known as a

How does a joint venture differ from a holding company?

A firm is technically insolvent when: it is unable to meet it current obligations and:

One anti-takeover measure is the ____, where the target company makes a takeover bid for the stock of the bidder.

What are some informal alternatives for salvaging a failing business?

The Role and Objective of Financial Management

The Domestic and International Financial Marketplace

Evaluation of Financial Performance

Financial Planning and Forecasting

The Time Value of Money

Fixed Income Securities: Characteristics and Valuation

Common Stock: Characteristics, Valuation, and Issuance

Analysis of Risk and Return

Capital Budgeting and Cash Flow Analysis

Capital Budgeting: Decision Criteria and Real Option Considerations

Capital Budgeting and Risk

The Cost of Capital

Capital Structure Concepts

Capital Structure Management in Practice

Dividend Policy

Working Capital Policy and Short-term Financing

The Management of Cash and Marketable Securities

Management of Accounts Receivable and Inventories

Lease and Intermediate-term Financing

Financing With Derivatives

Risk Management

International Financial Management

Continuous Compounding and Discounting

Mutually Exclusive Investments Having Unequal Lives

Breakeven Analysis

Bond Refunding Analysis

Taxes

Filters

Exam 23: Corporate Restructuring

In a(n) ____ common stock in a division or subsidiary is distributed to shareholders of the parent company on a pro rata basis.

Which of the following terms are not associated with mergers and acquisitions?

In the ____ method of combining financial accounts in a merger, the acquired company's assets are recorded on the acquiring company's books at their cost (net of depreciation) when originally acquired.

A plan of reorganization must be all of the following EXCEPT:

A bond that contains a put option that can be exercised only if an unfriendly takeover occurs, is an example of a ____ .

A combination of two or more companies in which neither competes directly with the other and no buyer-seller relationship exists is known as a

How does a joint venture differ from a holding company?

A firm is technically insolvent when: it is unable to meet it current obligations and:

One anti-takeover measure is the ____, where the target company makes a takeover bid for the stock of the bidder.

What are some informal alternatives for salvaging a failing business?

The Role and Objective of Financial Management

The Domestic and International Financial Marketplace

Evaluation of Financial Performance

Financial Planning and Forecasting

The Time Value of Money

Fixed Income Securities: Characteristics and Valuation

Common Stock: Characteristics, Valuation, and Issuance

Analysis of Risk and Return

Capital Budgeting and Cash Flow Analysis

Capital Budgeting: Decision Criteria and Real Option Considerations

Capital Budgeting and Risk

The Cost of Capital

Capital Structure Concepts

Capital Structure Management in Practice

Dividend Policy

Working Capital Policy and Short-term Financing

The Management of Cash and Marketable Securities

Management of Accounts Receivable and Inventories

Lease and Intermediate-term Financing

Financing With Derivatives

Risk Management

International Financial Management

Continuous Compounding and Discounting

Mutually Exclusive Investments Having Unequal Lives

Breakeven Analysis

Bond Refunding Analysis

Taxes

Filters