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41.
Which one of the following best defines synergy given the following?
VA = Value of firm A
VB = Value of firm B
VAB = Value of merged firm AB
42.
Which one of the following statements is correct?
43.
Which one of the following pairs of businesses could probably benefit the
most by sharing complementary resources?
44.
Assume the shareholders of a target firm benefit from being acquired in a
stock transaction. Given this, these shareholders are most apt to realize the
largest benefit if the:
45.
Which of the following represent potential gains from an acquisition?
I. increased use of debt
II. lower costs per unit produced
III. strategic beachhead
IV. diseconomies of scale
46.
The value of a target firm to the acquiring firm is equal to:
47.
If an acquisition does not create value and the market is smart, then the:
48.
An acquisition completed simply to diversify a firm will:
49.
Which one of the following statements is correct?
50.
The primary purpose of a flip-in provision is to:
51.
If a firm sells its crown jewels when threatened with a takeover attempt, the
firm is employing a strategy commonly referred to as a _____ strategy.
52.
Which one of the following defensive tactics is designed to prevent a "two-
tier" takeover offer?
53.
Which of the following have been suggested as reasons why the
stockholders in acquiring firms may not benefit to any significant degree
from an acquisition?
I. the price paid for the target firm might equal the target firm's total value
II. management may have priorities other than the interest of the
stockholders
III. the takeover market may not be competitive
IV. anticipated merger gains may not be fully achieved
54.
Which of the following are reasons why a firm may want to divest itself of
some of its assets?
I. to raise cash
II. to unload unprofitable operations
III. to improve the strategic fit of a firm's various divisions
IV. to comply with antitrust regulations
55.
Which one of the following statements is correct?
56.
Nelson's Interiors has $1.52 million in net working capital. The firm has
fixed assets with a book value of $23.23 million and a market value of
$26.16 million. The firm has no long-term debt. The Home Centre is buying
Nelson's Interiors for $29.5 million in cash. The acquisition will be recorded
using the purchase accounting method. What is the amount of goodwill that
The Home Centre will record on its balance sheet as a result of this
acquisition?
57.
Troyer Markets and Deb's Grocery are all-equity firms. Troyer Markets has
2,400 shares outstanding at a market price of $14.80 a share. Deb's Grocery
has 3,200 shares outstanding at a price of $28 a share. Deb's Grocery is
acquiring Troyer Markets for $37,500 in cash. What is the merger premium
per share?
58.
The Cycle Stop has 1,600 shares outstanding at a market price per share of
$8.48. Kate's Wheels has 1,750 shares outstanding at a market price of $13
a share. Neither firm has any debt. Kate's Wheels is acquiring The Cycle
Stop for $15,000 in cash. What is the merger premium per share?
59.
Rosie's has 1,800 shares outstanding at a market price per share of $23.50.
Sandy's has 2,500 shares outstanding at a market price of $21 a share.
Neither firm has any debt. Sandy's is acquiring Rosie's. The incremental
value of the acquisition is $1,200. What is the value of Rosie's to Sandy's?
60.
The Town Crier and The News Express are all-equity firms. The Town Crier
has 11,500 shares outstanding at a market price of $26 a share. The News
Express has 15,000 shares outstanding at a price of $31 a share. The News
Express is acquiring The Town Crier. The incremental value of the
acquisition is $4,500. What is the value of The Town Crier to The News
Express?
