100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Mergers Acquisitions And Other Restructuring Activities 7th Edition by Donald DePamphilis -Test Bank $27.29
Add to cart
Quickly navigate to
Preview
  2.  
  3. Mergers Acquisitions
  4.  
  5. Mergers Acquisitions
  6.  
  7. Mergers Acquisitions

Exam (elaborations)

Mergers Acquisitions And Other Restructuring Activities 7th Edition by Donald DePamphilis -Test Bank
 1 purchase
  • Course
  • Mergers Acquisitions
  • Institution
  • Mergers Acquisitions

Mergers Acquisitions And Other Restructuring Activities 7th Edition by Donald DePamphilis -Test Bank

Preview 4 out of 241  pages

Document information

  • December 15, 2023
  • 241
  • 2022/2023
  • Exam (elaborations)
  • Questions & answers

Subjects

  • testbank
  • completetestbank
  • mergers acquisitions
  • 7th edition
  • by donald depamphilis
  • mergers acquisitions and other restructuring
  • other restructuring activities

Written for

  • Mergers Acquisitions
  • Mergers Acquisitions
  • Mergers Acquisitions
All documents for this subject (6)

Seller

avatar-seller
evileye251

Reviews received

Content preview

, Chapter 1: Introduction to Mergers, Acquisitions, and Other Restructuring Activities


Examination Questions and Answers

True/False: Answer True or False to the following questions:

1. A divestiture is the sale of all or substantially all of a company or product line to another party for cash or
securities. True or False
Answer: True

2. The target company is the firm being solicited by the acquiring company. True or False
Answer: True

3. A merger of equals is a merger framework usually applied whenever the merger participants are comparable in
size, competitive position, profitability, and market capitalization. True or False
Answer: True

4. A vertical merger is one in which the merger participants are usually competitors. True or False
Answer: False

5. Joint ventures are cooperative business relationships formed by two or more separate parties to achieve
common strategic objectives True or False
Answer: True

6. Operational restructuring refers to the outright or partial sale of companies or product lines or to downsizing by
closing unprofitable or non-strategic facilities. True or False
Answer: True

7. The primary advantage of a holding company structure is the potential leverage that can be achieved by
gaining effective control of other companies’ assets at a lower overall cost than would be required if the firm
were to acquire 100 percent of the target’s outstanding stock. True or False
Answer: True

8. Holding companies and their shareholders may be subject to triple taxation. True or False
Answer: True

9. Investment bankers offer strategic and tactical advice and acquisition opportunities, screen potential buyers and
sellers, make initial contact with a seller or buyer, and provide negotiation support for their clients.
True or False
Answer: True

10. Large investment banks invariably provide higher quality service and advice than smaller, so-called boutique
investment banks. True or False
Answer: False

11. Financial restructuring generally refers to actions taken by the firm to change total debt and equity structure.
True or False
Answer: True

12. An acquisition occurs when one firm takes a controlling interest in another firm, a legal subsidiary of another
firm, or selected assets of another firm. The acquired firm often remains a subsidiary of the acquiring
company. True or False
Answer: True

13. A leveraged buyout is the purchase of a company using as much equity as possible. True or False

, Answer: False

14. In a statutory merger, both the acquiring and target firms survive. True or False
Answer: False

15. In a statutory merger, the acquiring company assumes the assets and liabilities of the target firm in accordance
with the prevailing federal government statutes. True or False
Answer: False

16. In a consolidation, two or more companies join together to form a new firm. True or False
Answer: True

17. A horizontal merger occurs between two companies within the same industry. True or False
Answer: True

18. A conglomerate merger is one in which a firm acquires other firms, which are highly related to its current core
business. True or False
Answer: False

19. The acquisition of a coal mining business by a steel manufacturing company is an example of a vertical
merger. True or False
Answer: True

20. The merger of Exxon Oil Company and Mobil Oil Company was considered a horizontal merger. True or
False
Answer: True

21. Most M&A transactions in the United States are hostile or unfriendly takeover attempts. True or False
Answer: False

22. Holding companies can gain effective control of other companies by owning significantly less than 100% of
their outstanding voting stock. True or False
Answer: True

23. Only interest payments on ESOP loans are tax deductible by the firm sponsoring the ESOP. True or False
Answer: False

24. A joint venture rarely takes the legal form of a corporation. True or False
Answer: False

25. When investment bankers are paid by a firm’s board to evaluate a proposed takeover bid, their opinions are
given in a so-called “fairness letter.” True or False
Answer: True

26. Synergy is the notion that the combination of two or more firms will create value exceeding what either firm
could have achieved if they had remained independent. True or False
Answer: True

27. Operating synergy consists of economies of scale and scope. Economies of scale refer to the spreading of
variable costs over increasing production levels, while economies of scope refer to the use of a specific asset to
produce multiple related products or services. True or False
Answer: False

28. Most empirical studies support the conclusion that unrelated diversification benefits a firm’s shareholders.
True or False
Answer: False


2

, 29. Deregulated industries often experience an upsurge in M&A activity shortly after regulations are removed.
True or False
Answer: True

30. Because of hubris, managers of acquiring firms often believe their valuation of a target firm is superior to the
market’s valuation. Consequently, they often end up overpaying for the firm. True and False
Answer: True

31. During periods of high inflation, the market value of assets is often less than their book value. This often
creates an attractive M&A opportunity. True or False
Answer: False

32. Tax benefits, such as tax credits and net operating loss carry-forwards of the target firm, are often considered
the primary reason for the acquisition of that firm. True or False
Answer: False

33. Market power is a theory that suggests that firms merge to improve their ability to set product and service
selling prices. True or False
Answer: True

34. Mergers and acquisitions rarely pay off for target firm shareholders, but they are usually beneficial to acquiring
firm shareholders. True or False
Answer: False

35. Pre-merger returns to target firm shareholders average about 30% around the announcement date of the
transaction. True or False
Answer: True

36. Post-merger returns to shareholders often do not meet expectations. However, this is also true of such
alternatives to M&As as joint ventures, alliances, and new product introductions. True or False
Answer: True

37. Overpayment is the leading factor contributing to the failure of M&As to meet expectations. True or False
Answer: True

38. Takeover attempts are likely to increase when the market value of a firm’s assets is more than their
replacement value. True or False
Answer: False

39. Although there is substantial evidence that mergers pay off for target firm shareholders around the time the
takeover is announced, shareholder wealth creation in the 3-5 years following a takeover is often limited.
True or False
Answer: True

40. A statutory merger is a combination of two corporations in which only one corporation survives and the
merged corporation goes out of existence. True or False
Answer: True

41. A subsidiary merger is a merger of two companies where the target company becomes a subsidiary of the
parent. True or False
Answer: True

42. Consolidation occurs when two or more companies join to form a new company. True or False
Answer: True



3

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller evileye251. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $27.29. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

63950 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling

Recently viewed by you

Other ·

(0)

BIOS 255 MIDTERM STUDY GUIDE / BIOS255 MIDTERM STUDY GUIDE (LATEST 2021) | CHAMBERLAIN COLLEGE OF NURSING

Other ·

(0)

ENGL 147N Week 7 Assignment; Final Draft of the Argument Research Paper - Assisted Reproduction Technologies

Exam (elaborations) ·

(1)

Portage Learning Pathophysiology NURS 231/BIOD 331 Module 2 Exam All Versions Latest Update/ Verified

Exam (elaborations) ·

(0)

2024 HESI RN EXIT V2 EXAM WITH NGN & SATA Questions and Verified Rationalized Answers, 100% Guarantee Pass

Exam (elaborations) ·

(0)

| LATEST EXAM UPDATES| 2024/25 |THE ODYSSEY, PART II TEST STUDY GUIDE EXAM REVIEW QUESTIONS AND ANSWERS, RATED A+/

Exam (elaborations) ·

(0)

NRNP 6568 Week 9 Knowledge Check: Preventative Health and Special Populations (10 out of 10 Points) Graded A +

Exam (elaborations) ·

(1)

TEST BANK FOR UNDERSTANDING NURSING RESEARCH 8TH EDITION BY SUSAN K GROVE & JENNIFER R GRAY LATEST

Package deal ·

(0)

RCTC NURS 1117 Bundled Exams Questions and Answers Latest Versions (2024/2025) (Complete and Accurate)

Exam (elaborations) ·

(0)

DPT 540 - VESTIBULAR SYSTEM EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED LATEST UPDATE

$27.29  1x  sold
  • (0)
Add to cart
Added