Question 1

If the acquiring firm's P/E ratio is greater than the P/E of the acquired firm, the surviving firm will automatically get an increase in EPS.

Accepted Answer

A) True 
 B)False

Question 2

In planning mergers, there is a tendency to _____ synergistic benefits.

Accepted Answer

A)  overestimate 
B)  underestimate 
C)  correctly estimate 
D)  need more information 
A)  overestimate 
B)  underestimate 
C)  correctly estimate 
D)  need more information

Question 3

Vertical integration represents acquisition of a competitor.

Accepted Answer

A) True 
 B)False

Question 4

The Investment Canada Act is intended to:

Accepted Answer

A)  lower interest rates in foreign investments. 
B)  change regulation of Canadian companies investing abroad. 
C)  increasing foreign competition in Canada. 
D)  ensure that the takeover of a Canadian company by a foreign entity will result in a net gain for Canada. 
A)  lower interest rates in foreign investments. 
B)  change regulation of Canadian companies investing abroad. 
C)  increasing foreign competition in Canada. 
D)  ensure that the takeover of a Canadian company by a foreign entity will result in a net gain for Canada.

Question 5

Most mergers are horizontal in nature in order to avoid the potential complications involved with the elimination of competition.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a motive for selling by the shareholders of the acquired company?

Accepted Answer

A)  Opportunity to diversify 
B)  Tax advantage 
C)  Attractive price 
D)  Avoid bias against smaller businesses 
A)  Opportunity to diversify 
B)  Tax advantage 
C)  Attractive price 
D)  Avoid bias against smaller businesses

Question 7

Hostile takeovers are less common in Canada because:

Accepted Answer

A)  Canadian use of IFRS makes companies appear less profitable. 
B)  share ownership is not widely held. 
C)  companies have greater regulatory requirements. 
D)  the government does not allow hostile takeovers. 
A)  Canadian use of IFRS makes companies appear less profitable. 
B)  share ownership is not widely held. 
C)  companies have greater regulatory requirements. 
D)  the government does not allow hostile takeovers.

If the acquiring firm's P/E ratio is greater than the P/E of the acquired firm, the surviving firm will automatically get an increase in EPS.

In planning mergers, there is a tendency to _____ synergistic benefits.

Vertical integration represents acquisition of a competitor.

The Investment Canada Act is intended to:

Most mergers are horizontal in nature in order to avoid the potential complications involved with the elimination of competition.

Which of the following is not a motive for selling by the shareholders of the acquired company?

Hostile takeovers are less common in Canada because:

The Goals and Functions of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

The Time Value of Money

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Underwriting

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Derivative Securities

International Financial Management

Filters

Exam 20: External Growth Through Mergers

If the acquiring firm's P/E ratio is greater than the P/E of the acquired firm, the surviving firm will automatically get an increase in EPS.

In planning mergers, there is a tendency to _____ synergistic benefits.

Vertical integration represents acquisition of a competitor.

The Investment Canada Act is intended to:

Most mergers are horizontal in nature in order to avoid the potential complications involved with the elimination of competition.

Which of the following is not a motive for selling by the shareholders of the acquired company?

Hostile takeovers are less common in Canada because:

The Goals and Functions of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

The Time Value of Money

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Underwriting

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Derivative Securities

International Financial Management

Filters