Question 1

A conglomerate merger occurs when:

Accepted Answer

A)  both partners are large in size. 
B)  large synergies are expected to develop. 
C)  firms from different industries merge. 
D)  both management teams remain intact after the merger.

Question 2

One of the reasons why proxy fights are rarely successful is that:

Accepted Answer

A)  management is always viewed as performing its job well. 
B)  management can use corporate resources to defend against the fight. 
C)  mergers are a cheaper form of changing management. 
D)  shareholders are unconcerned with corporate management.

Question 3

Shares of a corporation can,under certain circumstances,be priced at different amounts to different investors under the terms of a:

Accepted Answer

A)  proxy agreement. 
B)  public tender offer. 
C)  poison pill. 
D)  shark repellent.

Question 4

A merger is expected to produce cost savings of $50 million and the acquired firm's shareholders will receive a premium of 20% over the $150 million value of their firm.The gain of the merger to the acquirer is:

Accepted Answer

A)  $20 million. 
B)  $30 million. 
C)  $50 million. 
D)  $130 million.

Question 5

Changing management is the only reason that firms make acquisitions.

Accepted Answer

A) True 
 B)False

Exam 21: Mergers, Acquisitions, and Corporate Control

A conglomerate merger occurs when:

One of the reasons why proxy fights are rarely successful is that:

Shares of a corporation can,under certain circumstances,be priced at different amounts to different investors under the terms of a:

A merger is expected to produce cost savings of $50 million and the acquired firm's shareholders will receive a premium of 20% over the $150 million value of their firm.The gain of the merger to the acquirer is:

Changing management is the only reason that firms make acquisitions.