Exam 19: Acquisitions and Mergers in Financial-Services Management

According to the textbook,the financial success of a bank merger depends heavily upon the comparative dollar amounts of earnings reported by the two banking organizations and their relative price-earnings ratios.

A study by the Federal Reserve Board indicates that there are economies of scale (cost savings)resulting from mergers among relatively smaller banks and insurance companies.

Increase in earnings of a bank as a result of consolidation of operations and elimination of unnecessary duplication usually exhibits improving ___________ efficiency.

The degree of dilution in earnings of a combined firm is a function of a differential in the _________ and relative size of the two merging companies.

Bank regulators may challenge a merger between two institutions but can never require banks to divest themselves of some of their offices in order to secure regulators' approval.

Marking off a certain neighborhood by a bank within their trade area and declining to extend financial services (especially credit)to the residents of that neighborhood is known as:

The federal law that requires each U.S.merging bank to notify its principal federal regulatory agency and request for an approval before a merger can take place is the:

Dorchester County has the following five banks in its market area: Bank Total Assets First National Bank, NA \ 1,500 million Dorehester County Bank \ 750 million First State Bank \ 500 million Summerfield Bank \ 250 million Charlestown Bank \ 250 million All Banks \ 3,250 million -There are 10 banks in a particular market area,all with a market share of 10 percent.Two of the banks plan to merge and the Herfindahl-Hirschman Index moves from 1,000 to 1,200.The Justice Department:

Dorchester County has the following five banks in its market area: Bank Total Assets First National Bank, NA \ 1,500 million Dorehester County Bank \ 750 million First State Bank \ 500 million Summerfield Bank \ 250 million Charlestown Bank \ 250 million All Banks \ 3,250 million -What is the market share of the First National Bank?

The amount paid over the current stock price to shareholders of the acquired firm by the acquiring bank in a merger is known as ___________________________.

The most important goal of any merger should be to:

When a national bank wants to acquire another bank,it must apply to the __________________ for approval.

Recent research indicates that some merger activity may actually stimulate "de novo" bank entry into the marketplace.

Recent research on interstate bank mergers suggests that generally such mergers have resulted in:

There is little evidence for cost savings resulting from large financial institution mergers.

The passage of _______________________ Act in the United States allowed various combinations of bank-nonbank financial services and permitted banks,insurance companies,and securities firms to acquire each other.

The First State Bank of Wyoming wants to acquire the First State Bank of Oklahoma.The management of the bank feels that this will increase earnings as new markets will be exploited and new services will be offered to all of their bank customers.Which motive for a merger does this most likely reflect?

Which of the following is(are)reason(s)that many bank mergers do not work?

The approach in which the firm to be acquired is valued at its purchase price and that price is added to the total assets of the acquirer is known as the:

According to the text,many European bank mergers in recent years is motivated by the search of: