Chapter 33 Quiz, Mergers
1.
A reason for acquisitions is synergy. Synergy includes:
A.
Revenue enhancements
B.
Cost reductions
C.
Lower taxes
D.
All of the above
E.
None of the above
2.
Daimler-Benz's acquisition of Chrysler is an example of:
A.
Horizontal merger
B.
Vertical merger
C.
Cross-border merger
D.
Both A and C
E.
Both B and C
3.
The following reasons are good motives for mergers except:
A.
Economies of scale
B.
Complementary resources
C.
Diversification
D.
Unused tax shields
4.
Firm A has a value of $100 million, and B has a value of $70 million. Merging the two would allow a cost savings with a present value of $20 million. Firm A purchases B for $75 million. What is the gain from this merger?
A.
$30 million
B.
$20 million
C.
$15 million
D.
$10 million
5.
Firm A is planning to acquire Firm B. If Firm A prefers to make a cash offer for the merger it indicates that:
A.
Firm A's managers are optimistic about the post merger value of A
B.
Firm A's managers are pessimistic about the post merger value of A
C.
Firm A's managers are neutral about the post merger value of A
D.
None of the above
6.
The acquisition of stock has the advantage of:
A.
No shareholder meeting to vote is necessary
B.
Minority shareholders may exist
C.
Opening the bidding to others
D.
All of the above
E.
None of the above
7.
Following an acquisition, the assets of the acquired firm are added to the assets of the acquiring firm at their book value. What form of merger accounting is being used?
A.
Consolidation
B.
Aggregation
C.
Purchase
D.
Pooling
8.
The XAP Corporation with a book value of $20 million and a market value of $30 million has merged with the CDF Corporation with a book value of $6 million and a market value of $8 million at a price of $9 million. If the transaction is a pooling of interest then the total asset on the books of the new company will be:
A.
$38 million
B.
$29 million
C.
$39 million
D.
$26 million
9.
A dissident group solicits votes in an attempt to replace existing management. This is called a:
A.
Tender offer
B.
Shareholder derivative action
C.
Proxy fight
D.
Management freeze-out
E.
None of the above
10.
A modification of the corporate charter that requires 80% shareholder approval for takeover is called a(n):
A.
Repurchase standstill provision
B.
Exclusionary self-tender
C.
Super majority amendment
D.
Tender offer
11.
An example of a shark-repellent charter amendment is:
A.
Supermajority
B.
Waiting period
C.
Poison pill
D.
Staggered board
E.
All of the above
12.
As a defensive maneuver, a firm issues deep-discount bonds that rare redeemable at par in the event of an unfriendly takeover. These bonds are an example of:
A.
Greenmail
B.
A "scorched earth" policy
C.
A poison pill
D.
Crown jewels
E.
A poison put
13.
Compensation paid to top management in the event of a takeover is called a:
A.
Poison pill
B.
Golden parachute
C.
Self-tender
D.
Buyout
14.
A conglomerate merger is one in which a buyer buys a closely related firm.
A.
True
B.
False
15.
Diversification is a sensible reason for two companies to merge.
A.
True
B.
False
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