企业理财习题库Chap.docx
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企业理财习题库Chap
CHAPTER25
MergersandAcquisitions
I.DEFINITIONS
MERGER
a1.Thecompleteabsorptionofonecompanybyanother,whereintheacquiringfirmretainsitsidentityandtheacquiredfirmceasestoexistasaseparateentity,iscalleda:
a.merger.
b.consolidation.
c.tenderoffer.
d.spinoff.
e.divestiture.
CONSOLIDATION
b2.Amergerinwhichanentirelynewfirmiscreatedandboththeacquiredandacquiringfirmsceasetoexistiscalleda:
a.divestiture.
b.consolidation.
c.tenderoffer.
d.spinoff.
e.conglomeration.
TENDEROFFER
c3.Apublicofferbyonefirmtodirectlybuythesharesofanotherfirmiscalleda:
a.merger.
b.consolidation.
c.tenderoffer.
d.spinoff.
e.divestiture.
HORIZONTALACQUISITION
d4.Theacquisitionofafirminthesameindustryasthebidderiscalleda_____acquisition.
a.conglomerate
b.forward
c.backward
d.horizontal
e.vertical
VERTICALACQUISITION
e5.Theacquisitionofafirminvolvedwithadifferentproductionprocessstagethanthebidderiscalleda_____acquisition.
a.conglomerate
b.forward
c.backward
d.horizontal
e.vertical
CONGLOMERATEACQUISITION
a6.Theacquisitionofafirmwhosebusinessisnotrelatedtothatofthebidderiscalleda_____acquisition.
a.conglomerate
b.forward
c.backward
d.horizontal
e.vertical
PROXYCONTEST
b7.Anattempttogaincontrolofafirmbysolicitingasufficientnumberofstockholdervotestoreplacethecurrentboardofdirectorsiscalleda:
a.tenderoffer.
b.proxycontest.
c.going-privatetransaction.
d.leveragedbuyout.
e.consolidation.
GOING-PRIVATETRANSACTION
c8.Abusinessdealinwhichallpubliclyownedstockinafirmisreplacedwithcompleteequityownershipbyaprivategroupiscalleda:
a.tenderoffer.
b.proxycontest.
c.going-privatetransaction.
d.leveragedbuyout.
e.consolidation.
LEVERAGEDBUYOUT
d9.Going-privatetransactionsinwhichalargepercentageofthemoneyusedtobuytheoutstandingstockisborrowediscalleda:
a.tenderoffer.
b.proxycontest.
c.merger.
d.leveragedbuyout.
e.consolidation.
STRATEGICALLIANCE
e10.Anagreementbetweenfirmstocooperateinpursuitofajointgoaliscalleda:
a.consolidation.
b.mergedalliance.
c.jointventure.
d.takeoverproject.
e.strategicalliance.
JOINTVENTURE
c11.Anagreementbetweenfirmstocreateaseparate,co-ownedentityestablishedtopursueajointgoaliscalleda:
a.consolidation.
b.strategicalliance.
c.jointventure.
d.mergedalliance.
e.takeoverproject.
SYNERGY
e12.Thepositiveincrementalnetgainassociatedwiththecombinationoftwofirmsthroughamergeroracquisitioniscalled:
a.theagencyconflict.
b.goodwill.
c.themergercost.
d.theconsolidationeffect.
e.synergy.
SUPERMAJORITYAMENDMENT
a13.Achangeinthecorporatechartermakingitmoredifficultforthefirmtobeacquiredbyincreasingthepercentageofshareholdersthatmustapproveamergerofferiscalleda:
a.supermajorityamendment.
b.standstillagreement.
c.greenmailprovision.
d.poisonpillamendment.
e.whiteknightprovision.
STANDSTILLAGREEMENT
b14.Acontractwhereinthebiddingfirmagreestolimititsholdingsinthetargetfirmiscalleda:
a.supermajorityamendment.
b.standstillagreement.
c.greenmailprovision.
d.poisonpillamendment.
e.whiteknightprovision.
GREENMAIL
c15.Thepaymentsmadebyafirmtorepurchasesharesofitsoutstandingstockfromanindividualinvestorinanattempttoeliminateapotentialunfriendlytakeoverattemptarereferredtoas:
a.agoldenparachute.
b.standstillpayments.
c.greenmail.
d.apoisonpill.
e.awhiteknight.
POISONPILLS
d16.Afinancialdevicedesignedtomakeunfriendlytakeoverattemptsfinanciallyunappealing,ifnotimpossible,iscalled:
a.agoldenparachute.
b.astandstillagreement.
c.greenmail.
d.apoisonpill.
e.awhiteknight.
SHARERIGHTSPLANS
e17.Corporatecharterprovisionsallowingexistingstockholderstopurchasestockatsomefixedpriceintheeventofahostileoutsidetakeoverattemptarecalled:
a.pac-mandefenses.
b.sharkrepellentplans.
c.goldenparachuteprovisions.
d.greenmailprovisions.
e.sharerightsplans.
GOLDENPARACHUTES
a18.Generouscompensationpackagespaidtoafirm’stopmanagementintheeventofatakeoverarereferredtoas:
a.goldenparachutes.
b.poisonputs.
c.whiteknights.
d.sharkrepellents.
e.bearhugs.
POISONPUTS
b19.Corporatecharterprovisionsthatforcethefirmtobuybackitssecuritiesatasetandusuallyquitehighpricearecalled:
a.goldenparachutes.
b.poisonputs.
c.whiteknights.
d.sharkrepellents.
e.bearhugs.
WHITEKNIGHTS
c20.Afriendlysuitorthatatargetfirmturnstoasanalternativetoahostilebidderiscalleda:
a.goldensuitor.
b.poisonput.
c.whiteknight.
d.sharkrepellent.
e.crownjewel.
SHARKREPELLENT
d21.Anytacticemployedbyatargetfirmtodiscourageunwantedmergeroffersisreferredtoasa:
a.goldenparachute.
b.poisonput.
c.whiteknight.
d.sharkrepellent.
e.bearhug.
EQUITYCARVE-OUT
b22.Thesaleofstockinawhollyownedsubsidiaryviaaninitialpublicofferingisreferredtoasa（n）:
a.split-up.
b.equitycarve-out.
c.countertenderoffer.
d.whiteknighttransaction.
e.lockuptransaction.
SPIN-OFF
d23.Thedistributionofsharesinasubsidiarytoexistingparentcompanystockholdersiscalleda（n）:
a.lockuptransaction.
b.bearhug.
c.equitycarve-out.
d.spin-off.
e.split-up.
II.CONCEPTS
ACQUISITIONS
a24.Whichofthefollowingstatementsconcerningacquisitionsarecorrect?
I.Beingacquiredbyanotherfirmisaneffectivemethodofreplacingsenior
management.
II.Thenetpresentvalueofanacquisitionshouldhavenobearingonwhetherornotthe
acquisitionoccurs.
III.Acquisitionsareoftenrelativelycomplexfromanaccountingandtaxpointofview.
IV.Thevalueofastrategicfitiseasytoestimateusingdiscountedcashflowanalysis.
a.IandIIIonly
b.IIandIVonly
c.IandIVonly
d.I,III,andIVonly
e.I,II,III,andIV
MERGER
b25.Inamergerthe:
a.legalstatusofboththeacquiringfirmandthetargetfirmisterminated.
b.acquiringfirmretainsitsnameandlegalstatus.
c.acquiringfirmacquirestheassetsbutnottheliabilitiesofthetargetfirm.
d.stockholdersofthetargetfirmhavelittle,ifany,sayastowhetherornotthemerger
occurs.
e.targetfirmcontinuestoexistasasubsidiaryoftheacquiringfirm.
ACQUISITIONOFSTOCK
e26.Anacquisitionofafirmthroughthepurchaseofsharesoftheoutstandingstock:
I.isfrequentlymoreexpensivethanifthetwofirmshadjustmerged.
II.canbeaccomplishedwithouttheinvolvementofthetargetfirm’sboardofdirectors.
III.canbeaccomplishedwithouthavingtheshareholdersvoteontheacquisition.
IV.maybedependentuponthemaximumamountofsharesmadeavailableforsaletothe
acquiringfirm.
a.IandIIIonly
b.IIandIVonly
c.I,III,andIVonly
d.I,II,andIIIonly
e.I,II,III,andIV
VERTICALACQUISITION
d27.Whenabuildingsupplystoreacquiresalumbermilltheyaredoinga______
acquisition.
a.horizontal
b.longitudinal
c.conglomerate
d.vertical
e.complementaryresources
STOCKACQUISITION
c28.IfMicrosoftweretoacquireU.S.Airways,theacquisitionwouldbeclassifiedasa
_____acquisition.
a.horizontal
b.longitudinal
c.conglomerate
d.vertical
e.complementaryresources
TAKEOVERS
a29.AssumethatbothfirmAandfirmBformallyagreetoeachputup$10millionto
formfirmC.TheoperationsoffirmCarerestrictedtoconductingresearchand
developmentactivitiesforthebenefitoffirmsAandB.FirmCisa_____offirmsA
andB.
a.jointventure
b.going-privatetransaction
c.conglomerate
d.subsidiary
e.leveragedbuyout
TAKEOVERS
e30.Whichofthefollowingactivitiesarecommonlyassociatedwithtakeovers?
I.theacquisitionofassets
II.proxycontests
III.managementbuyouts
IV.leveragedbuyouts
a.IandIIIonly
b.IIandIVonly
c.I,III,andIVonly
d.I,II,andIVonly
e.I,II,III,andIV
TAXESANDACQUISITIONS
c31.Inatax-freeacquisition,theshareholdersofthetargetfirm:
a.receiveincomethatisconsideredtobetax-exempt.
b.gifttheirsharestoatax-exemptorganizationandthereforehavenotaxablegain.
c.areviewedashavingexchangedtheirshares.
d.selltheirsharestoaqualifyingentitytherebyavoidingbothincomeandcapitalgains
taxes.
e.selltheirsharesatcosttherebyavoidingthecapitalgainstax.
PURCHASEACCOUNTINGMETHOD
d32.Thepurchaseaccountingmethodrequiresthat:
a.theexcessofthepurchasepriceoverthefairmarketvalueofthetargetfirmbe
recordedasaone-timeexpenseontheincomestatementoftheacquiringfirm.
b.goodwillbeamortizedonayearlybasis.
c.theequityoftheacquiringfirmbereducedbytheexcessofthepurchasepriceoverthe
fairmarketvalueofthetargetfirm.
d.theassetsofthetargetfirmberecordedattheirfairmarketvalueonthebalancesheet
oftheacquiringfirm.
e.theexcessamountpaidforthetargetfirmberecordedasatangibleassetonthebooks
oftheacquiringfirm.
PURCHASEACCOUNTINGMETHOD
b33.Goodwillcreatedbyanacquisition:
a.affectsthecashflowsoftheacquiringfirmonanannualbasisforaperiodofyears.
b.mustbereviewedeachyeartodetermineitscurrentvaluetothefirm.
c.reducesthetaxableincomeofthefirmasitisex
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