Merger MCQs

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the complete absorption of one company by another, where in the acquiring firm retains its identity and the acquired firm ceases to exist as a separat...






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A merger is which an entirely new firm is created and both the acquired and acquiring firms cease to exist is called a:






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a public offer by one firm to directly buy the shares of another firm is called a:






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an attempt to gain control of a firm by soliciting a sufficient number of stockholder votes to replace existing management is called a:






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A business deal in which all publicly owned stock in a firm is replaced with complete equity ownership by a private group is called a:






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






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an agreement between firms to cooperate in pursuit of joint goal is called a:






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an agreement between firms to create a separate, co-owned entity established to pursue a joint goal is called a:






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the positive incremental net gain associated with the combination of two firms through a merger or acquisition is called:






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the payments made by a firm to repurchase shares of its outstanding stock from an individual investor in an attempt to eliminate a potential unfriendl...






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the acquisition of a firm in the same industry as the bidder is called a






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The acquisition of a firm involved with a different production process stage than the bidder is called a _____ acquisition.






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The acquisition of a firm whose business is not related to that of the bidder is called a _____ acquisition.






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Going-private transactions in which a large percentage of the money used to buy the outstanding stock is borrowed is called a:






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A change in the corporate charter making it more difficult for the firm to be acquired by increasing the percentage of shareholders that must approve...






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






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






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






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The sale of stock in a wholly owned subsidiary via an initial public offering is referred to as a(n):






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The distribution of shares in a subsidiary to existing parent company stockholders is called a(n):






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Which of the following statements concerning acquisitions are correct? I. Being acquired by another firm is an effective method of replacing senior m...






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In a merger the:






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When a building supply store acquires a lumber mill it is making a ______ acquisition.






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If Microsoft were to acquire U.S. Airways, the acquisition would be classified as a _____ acquisition.






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






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In a tax-free acquisition, the shareholders of the target firm:






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The purchase accounting method for mergers require that:






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A proposed acquisition may create synergy by: I. increasing the market power of the combined firm. II. improving the distribution network of the acq...






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Which of the following represent potential tax gains from an acquisition? I. a reduction in the level of debt II. an increase in surplus funds III....






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When evaluating an acquisition, you should:






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If an acquisition does not create value, then the:






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Which one of the following combinations of firms would benefit the most through the use of complementary resources?






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Which one of the following is most likely a good candidate for an acquisition that could benefit from the use of complementary resources?






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Which one of the following is most likely a good candidate for an acquisition that could benefit from the use of complementary resources?






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The shareholders of a target firm benefit the most when:






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Which of the following represent potential gains from an acquisition? I. the replacement of ineffective managers II. lower costs per unit produced ...






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The value of a target firm to the acquiring firm is equal to:






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Which one of the following statements is correct?






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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...






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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 opera...






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Which one of the following statements is correct?






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In a merger or acquisition, a firm should be acquired if it:






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A reason for acquisitions is synergy. Synergy includes:






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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...






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Firm A and Firm B join to create Firm AB. This is an example of:






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






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Suppose that General Motors has made an offer to acquire General Mills. Ignoring potential antitrust problems, this merger would be classified as a: ...






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Suppose that Exxon-Mobil acquired Schlumberger, an exploration/drilling company. Ignoring potential antitrust problems, this merger would be classifi...






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A dissident group solicits votes in an attempt to replace existing management. This is called a:






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If the All-Star Fuel Filling Company, a chain of gasoline stations acquire the Mid-States Refining Company, a refiner of oil products, this would be ...






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Which of the following is not true of an acquisition of stock or tender offers?






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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...






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One of the most basic reasons for a merger is:






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Cowboy Curtiss' Cowboy Hat Company recently completed a merger. When valuing the combined firm after the merger, which of the following is an ex...






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Turner, Inc. has $4.2 million in net working capital. The firm has fixed assets with a book value of $48.6 million and a market value of $53.4 million...






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Rudy's, Inc. and Blackstone, Inc. are all-equity firms. Rudy's has 1,500 shares outstanding at a market price of $22 a share. Blackstone ha...






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Jennifer'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...






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Jennifer'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 ...






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Rudy's, Inc. and Blackstone, Inc. are all-equity firms. Rudy's has 1,500 shares outstanding at a market price of $22 a share. Blackstone has...






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ABC and XYZ are all-equity firms. ABC has 1,750 shares outstanding at a market price of $20 a share. XYZ has 2,500 shares outstanding at a price of $...






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Firm A is acquiring Firm B for $40,000 in cash. Firm A has 2,500 shares of stock outstanding at a market value of $18 a share. Firm B has 1,500 share...






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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...






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Alto and Solo are all-equity firms. Alto has 2,400 shares outstanding at a market price of $24 a share. Solo has 4,000 shares outstanding at a price o...






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Principal, Inc. is acquiring Secondary Companies for $29,000 in cash. Principal has 2,500 shares of stock outstanding at a market price of $30 a share...






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Winslow Co. has agreed to be acquired by Ferrier, Inc. for $25,000 worth of Ferrier stock. Ferrier currently has 1,500 shares of stock outstanding at...






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Brite Industries has agreed to merge with Nu-Day, Inc. for $20,000 worth of Nu-Day stock. Brite has 1,200 shares of stock outstanding at a price of $1...






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Goodday & Sons is being acquired by Baker, Inc. for $19,000 worth of Baker stock. Baker has 1,500 shares of stock outstanding at a price of $25 a sha...






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Holiday & Sons is being acquired by Miller's, Inc. for $20,000 worth of Miller's stock. Miller has 1,300 shares of stock outstanding at...






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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 ...






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Firm X is being acquired by Firm Y for $35,000 worth of Firm Y stock. The incremental value of the acquisition is $2,500. Firm X has 2,000 shares of ...






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The difference between the public-offer price and the price paid by the underwriter is called