Exam 19: Acquisitions and Mergers in Financial-Services Management

There are three banks in East Panhandle.First State Bank which currently has 25 percent of the deposits,Second State Bank which currently has 40 percent of the deposits and Third State Bank which has the rest.Compute the share of the Third State Bank in the market.Suppose First State Bank and Third State Bank propose to merge in order to compete with Second State Bank.According to the Department of Justice Guidelines,would this merger be allowed?

When a merger takes place,some banks have been asked by the regulators to __________________ themselves of some of their branches to avoid anticompetitive activities.Many of these are sold to third parties.

When a bank expands the number of service options it offers after acquiring another financial firm,they have practiced __________________ diversification.

According to the textbook,bank mergers are often motivated by:

The ratio of an acquired bank's current stock price per share plus the additional amount paid by the acquirer for each share of the acquired bank's stock,divided by the acquired bank's current stock price is the:

The agency problem described in the textbook is referred to the idea of bank managers driven primarily by their own interest to increase salaries and benefits at the expense of company stockholders.

There are three banks in East Panhandle.First National Bank which currently has 40 percent of the deposits in the area,Second State Bank which currently has 30 percent of the deposits,and New State Bank and Trust which also has 30 percent of the deposits.What is the Herfindahl-Hirschman Index for East Panhandle?

________________________ refers to the movement of two or more industries over time toward each other,resulting in different firms offering many of the same services.

A market area served by one bank which is the only provider of financial services in that market would have an HHI of 100 percent.

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 -If Summerfield and Charlestown banks merge,what would be the Herfindahl-Hirschman Index after the merger?

When the existing ownership of a bank experiences a loss in their share of the company due to an increased number of shares going to new stockholders,it is known as _____________________.

There are three banks in East Panhandle.First State Bank which currently has 25 percent of the deposits,Second State Bank which currently has 40 percent of the deposits,and Third State Bank which has the rest.According to the Department of Justice Guidelines,this market will be identified as:

According to a recent survey,many European bank mergers in the 1980s and 1990s were motivated by the desire to reduce operating costs(economies of scale).

Research indicates that economies of scale (cost savings)often results in mergers of financial institutions which are relatively:

Empirical evidence suggests that earnings outcomes from mergers exhibit:

A large metropolitan or money center bank is often called a(n)______________.

The ______________________ is the proportion of shares of stock the shareholders of an acquired firm receive from the acquiring firm.

The Financial Accounting Standards Board labels ____________ as the "intangible synergies" of a combined firm resulting from a merger.

Mergers with anticompetitive effects cannot go unchallenged by federal authorities unless the banks can show that the combined bank would have significant public benefits.

The most important goal of any merger should be to increase the market value of the surviving firm.