Exam 29: Mergers, Acquisitions, and Divestitures

Which of the following statements concerning acquisitions are correct? I. Being acquired by another firm is an effective method of replacing senior management. II. The net present value of an acquisition should have no bearing on whether or not the acquisition occurs. III. Acquisitions are often relatively complex from an accounting and tax point of view. IV. The value of a strategic fit is easy to estimate using discounted cash flow analysis.

(Multiple Choice)

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Question 21

A friendly suitor that a target firm turns to as an alternative to a hostile bidder is called a:

(Multiple Choice)

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Question 22

One company wishes to acquire another. Which of the following forms of acquisition does not require a formal vote by the shareholders of the acquired firm?

(Multiple Choice)

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Question 23

Generous compensation packages paid to a firm's top management in the event of a takeover are referred to as:

(Multiple Choice)

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Question 24

The payments made by a firm to repurchase shares of its outstanding stock from an individual investor in an attempt to eliminate a potential unfriendly takeover attempt are referred to as:

(Multiple Choice)

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Question 25

Firm A is being acquired by Firm B for $24,000 worth of Firm B stock. The incremental value of the acquisition is $3,500. Firm A has 1,500 shares of stock outstanding at a price of $15 a share. Firm B has 1,200 shares of stock outstanding at a price of $30 a share. What is the value per share of Firm B after the acquisition?

(Multiple Choice)

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Question 26

Which of the following activities are commonly associated with takeovers? I. the acquisition of assets II. proxy contests III. management buyouts IV. leveraged buyouts

(Multiple Choice)

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Question 27

Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 1,800 shares outstanding at a price of $15 a share. The after-merger earnings will be $6,500. What will the earnings per share be after the merger?

(Multiple Choice)

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Question 28

If a firm wants to take over another firm but feels the attempt to do so will be viewed as unfriendly it could decide to take a _____ approach to the acquisition.

(Multiple Choice)

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Question 29

Suppose that Verizon and Sprint were to merge. Ignoring potential antitrust problems,this merger would be classified as a:

(Multiple Choice)

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Question 30

Cowboy Curtiss' Cowboy Hat Company recently completed a merger. When valuing the combined firm after the merger,which of the following is an example of the type of common mistakes that can occur?

(Multiple Choice)

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Question 31

Cassandra's Boutique has 2,100 shares outstanding at a market price per share of $26. Sally's has 3,000 shares outstanding at a market price of $41 a share. Neither firm has any debt. Sally's is acquiring Cassandra's for $58,000 in cash. The incremental value of the acquisition is $2,500. What is the value of Cassandra's Boutique to Sally's?

(Multiple Choice)

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Question 32

Firm V was worth $500 and Firm A had a market value of $400. Firm V acquired Firm A for $450 because they thought the combination of the new Firm VA was worth $1,000. What is the synergy from the merger of Firm V and Firm A?

(Multiple Choice)

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Question 33

Cassandra's Boutique has 2,100 shares outstanding at a market price per share of $26. Sally's has 3,000 shares outstanding at a market price of $41 a share. Neither firm has any debt. Sally's is acquiring Cassandra's for $58,000 in cash. What is the merger premium per share?

(Multiple Choice)

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(73)

Question 34

When the management and/or a small group of investors take over a firm and the shares of the firm are delisted and no longer publicly available,this action is known as a:

(Multiple Choice)

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Question 35

Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 3,000 shares of stock outstanding at a market price of $15 a share. Firm B has 1,000 shares outstanding at a price of $10 a share. What is the value per share of the merged firm?

(Multiple Choice)

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Question 36

A contract wherein the bidding firm agrees to limit its holdings in the target firm is called a:

(Multiple Choice)

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Question 37

Firm A is acquiring Firm B for $25,000 in cash. Firm A has 2,000 shares of stock outstanding at a market value of $21 a share. Firm B has 1,200 shares of stock outstanding at a market price of $17 a share. Neither firm has any debt. The net present value of the acquisition is $1,500. What is the price per share of Firm A after the acquisition?

(Multiple Choice)

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Question 38

Which of the following are reasons why a firm may want to divest itself of some of its assets? I. To raise cash II. To get rid of unprofitable operations III. To get rid of some assets received in an acquisition IV. To cash in on some profitable operations

(Multiple Choice)

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Question 39

A going-private transaction in which a large percentage of the money used to buy the outstanding stock is borrowed is called a:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 83

Exam 29: Mergers, Acquisitions, and Divestitures

A friendly suitor that a target firm turns to as an alternative to a hostile bidder is called a:

One company wishes to acquire another. Which of the following forms of acquisition does not require a formal vote by the shareholders of the acquired firm?

Generous compensation packages paid to a firm's top management in the event of a takeover are referred to as:

The payments made by a firm to repurchase shares of its outstanding stock from an individual investor in an attempt to eliminate a potential unfriendly takeover attempt are referred to as:

Which of the following activities are commonly associated with takeovers? I. the acquisition of assets II. proxy contests III. management buyouts IV. leveraged buyouts

If a firm wants to take over another firm but feels the attempt to do so will be viewed as unfriendly it could decide to take a _____ approach to the acquisition.

Suppose that Verizon and Sprint were to merge. Ignoring potential antitrust problems,this merger would be classified as a:

Cowboy Curtiss' Cowboy Hat Company recently completed a merger. When valuing the combined firm after the merger,which of the following is an example of the type of common mistakes that can occur?

Firm V was worth $500 and Firm A had a market value of $400. Firm V acquired Firm A for $450 because they thought the combination of the new Firm VA was worth $1,000. What is the synergy from the merger of Firm V and Firm A?

Cassandra's Boutique has 2,100 shares outstanding at a market price per share of $26. Sally's has 3,000 shares outstanding at a market price of $41 a share. Neither firm has any debt. Sally's is acquiring Cassandra's for $58,000 in cash. What is the merger premium per share?

When the management and/or a small group of investors take over a firm and the shares of the firm are delisted and no longer publicly available,this action is known as a:

A contract wherein the bidding firm agrees to limit its holdings in the target firm is called a:

Which of the following are reasons why a firm may want to divest itself of some of its assets? I. To raise cash II. To get rid of unprofitable operations III. To get rid of some assets received in an acquisition IV. To cash in on some profitable operations

A going-private transaction in which a large percentage of the money used to buy the outstanding stock is borrowed is called a:

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model Capm

An Alternative View of Risk and Return: The Arbitrage Pricing Theory

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Raising Capital

Leasing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

Short-Term Finance and Planning

Cash Management

Credit and Inventory Management

Financial Distress

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