Question 1

Which statement best describes mergers?

Accepted Answer

A)   If a company that produces military equipment merges with a company that manages a chain of motels, this is an example of a horizontal merger.
B)   A defensive merger is one where the firm's managers decide to merge with another firm to avoid or lessen the possibility of being acquired through a hostile takeover.
C)   Acquiring firms send a signal that their stock is undervalued if they choose to use stock to pay for the acquisition.D) A) and B)
E) A) and C)

Question 2

If a petrochemical firm that used oil as feedstock merged with an oil producer that had large oil reserves and a drilling subsidiary, this would be a vertical merger.

Accepted Answer

A) True 
 B)False

Question 3

Under purchase accounting, the acquired assets must be written up or written down if the purchase price does not equal net asset value.

Accepted Answer

A) True 
 B)False

Question 4

Which statement best describes leveraged buyouts (LBOs) ?

Accepted Answer

A)   LBOs occur when a firm issues equity and uses the proceeds to take a firm public.
B)   In a typical LBO, bondholders do well but shareholders see their value decline.
C)   Firms are forbidden by law to sell any assets during the first five years following a leverage buyout.
D)   The objective is to take the firm public again or to sell to others in a few years after boosting the firm's value through efficient management.E) All of the above
F) A) and B)

Question 5

Foreign firms are interested in buying Canadian companies to gain entrance to Canada. A decline in the value of the dollar relative to most foreign currencies makes this competitive strategy especially attractive.

Accepted Answer

A) True 
 B)False

Question 6

Synergistic benefits can arise from a number of different sources, including operating economies of scale, financial economies, and increased managerial efficiency.

Accepted Answer

A) True 
 B)False

Exam 24: Mergers, Acquisitions, and Restructuring

Under purchase accounting, the acquired assets must be written up or written down if the purchase price does not equal net asset value.

Correct Answer
verified

Which statement best describes leveraged buyouts (LBOs) ?

Correct Answer
verified

If a petrochemical firm that used oil as feedstock merged with an oil producer that had large oil reserves and a drilling subsidiary, this would be a vertical merger.

Correct Answer
verified

Which statement best describes mergers?

Correct Answer
verified

Foreign firms are interested in buying Canadian companies to gain entrance to Canada. A decline in the value of the dollar relative to most foreign currencies makes this competitive strategy especially attractive.

Correct Answer
verified

Synergistic benefits can arise from a number of different sources, including operating economies of scale, financial economies, and increased managerial efficiency.

Correct Answer
verified

Exam 24: Mergers, Acquisitions, and Restructuring

Under purchase accounting, the acquired assets must be written up or written down if the purchase price does not equal net asset value.

Correct AnswerverifiedShow Answer

Which statement best describes leveraged buyouts (LBOs) ?

Correct AnswerverifiedShow Answer

If a petrochemical firm that used oil as feedstock merged with an oil producer that had large oil reserves and a drilling subsidiary, this would be a vertical merger.

Correct AnswerverifiedShow Answer

Which statement best describes mergers?

Correct AnswerverifiedShow Answer

Foreign firms are interested in buying Canadian companies to gain entrance to Canada. A decline in the value of the dollar relative to most foreign currencies makes this competitive strategy especially attractive.

Correct AnswerverifiedShow Answer

Synergistic benefits can arise from a number of different sources, including operating economies of scale, financial economies, and increased managerial efficiency.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified