1) which of the following statements is false?
a.bidders almost always offer target firm shareholders a premium price for their stock
b.the average premium for completed u.s. mergers for the last 30 years has averaged
about 20%
c.premiums exist for mergers in many other countries in addition to the u.s
d.the merger premium is the difference between pre-merger market value and
acquisition value
2) which act requires public disclosure of ownership levels beyond 5 percent?
a.sherman antitrust act
b.williams act
c.herfindahl act
d.herfindahl-hirschman act
3) security i has a beta of 1.3, the risk-free rate is 4%, and the expected market risk
premium is 11%. what is the expected return for security i?
a.15.0%
b.18.3%
c.14.6%
d.13.1%
4) modern venture capital is defined as
a.a professionally managed pool of money raised for the sole purpose of making
actively managed direct equity investments in rapidly growing private companies
b.a professionally managed pool of money raised for the purpose of making equity
investments in slowly growing private companies
c.a professionally managed pool of money raised for the sole purpose of making
actively managed direct equity investments charitable ventures
d.none of the above
5) which type of lease has a term which is generally shorter than the economic life of
the asset being leased?
a.operating lease
b.capital lease
c.financial lease
d.leveraged lease
6) the expected possible outcomes for roxy stock are below; what is the expected
variance of roxy stock?
a.2.308%
b.0.053%
c.2.362%
d.0.056%
7) narrbegin: bavarian brewhouse
bavarian brewhouse
capital structure information for bavarian brewhouse
narrend
what percentage of bavarian brewhouses capital structure consists of total equity?
a.6.67%
b.60.00%
c.33.33%
d.66.67%
8) roxy internationa is considering retiring a $280 million bond issue sold to the public
15 years ago. the original maturity was 25 years. if the bonds were initially sold at 98,
then what is the dollar amount of the unamortized discount that would be accelerated at
retirement?
a.$5,824,000
b.$5,600,000
c.$ 224,000
d.$2,240,000
9) nuclear widgets has a current cost of levered equity equal to 13%. its return on assets
is 12% and its cost of debt is 8%. nuclear widgets has borrowed a total of $5,000,000.
what is the current value of nuclear widgets equity? ignore the effect of taxes.
a.$1,250,000
b.$20,000,000
c.the problem yields a negative number which means the problem is not realistic
d.not enough information is given
10) a merger in which the acquirer maintains the identity of the target as a separate
subsidiary or division.
a.subsidiary merger
b.statutory merger
c.subsidiary merger
d.reverse triangle merger
e.consolidation
11) narrbegin: bavarian brewhouse div.
bavarian brewhouse dividend
bavarian brewhouse had earnings per share of $2.50 in 2004 and paid out a dividend per
share of $1.45 that same year. earnings per share are expected to be $3.25 in 2005.
narrend
if bavarian brewhouse follows a constant nominal dividend policy what will be the
dividend per share in 2005?
a.$1.45
b.$2.59
c.$2.12
d.$3.25
12) roxy is considering a new cat food factory with the following cash flows, if the
discount rate is 10% what is the npv?
a. $ (2,895.30)
b. $ (1,098.82)
c. $ (7,007.03)
d. $ (9,877.08)
13) to maximize the value of a business, a firm needs access to capital and to minimize
risk for investors. given these guidelines, which business form should maximize value
for a firm?
a.sole proprietorship
b.limited partnership
c.general partnership
d.corporation
14) which of the following should not be considered a benefit to a firm that is issuing an
ipo?
a.access to additional capital
b.provide an alternative to cash for future acquisitions
c.have another source, other than cash for executive compensation
d.limits the founders ownership dilution