Question 1

A white knight benefits the:

Accepted Answer

A)  acquiring firm. 
B)  acquiring firm's shareholders. 
C)  officers of the acquired company. 
D)  potential acquired firm. 
A)  acquiring firm. 
B)  acquiring firm's shareholders. 
C)  officers of the acquired company. 
D)  potential acquired firm.

Question 2

Too much diversification has led some companies to sell off companies previously acquired during the merger boom.

Accepted Answer

A) True 
 B)False

Question 3

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 4

One potential advantage of a merger to the acquiring firm is the portfolio effect which attempts to achieve risk reduction while perhaps maintaining the rate of return for the firm.

Accepted Answer

A) True 
 B)False

Question 5

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.

Question 6

$\begin{array} { r r } &\underline{\text { Alpha }} &\underline{ \text { Beta }} \
\text {Total earnings}& \$ 1,000,000 & \$ 600,000 \ 
\text {Number of shares outstanding}&400,000 & 200,000 \
 \text {Earnings per share}&\$ 2.50 & \$ 3.00 \ 
 \text {Price/earnings}&12 \mathrm { X } & 10 \mathrm { X } \
\text { Market price/share } & \$ 30.00 & \$ 30.00 \end{array}$
-Alpha has a growth rate in EPS of 12%.Beta's growth rate in EPS is 9%.What is the post-merger growth rate assuming the facts as previously stated? (Assume no Synergy.)

Accepted Answer

A)  10.50% 
B)  10.88% 
C)  11.37% 
D)  11.87% 
A)  10.50% 
B)  10.88% 
C)  11.37% 
D)  11.87%

Question 7

The elimination of overlapping functions and the meshing of two firms' strong areas or products creates the managerial incentive for mergers known as:

Accepted Answer

A)  horizontal integration. 
B)  vertical integration. 
C)  synergy. 
D)  the portfolio effect. 
A)  horizontal integration. 
B)  vertical integration. 
C)  synergy. 
D)  the portfolio effect.

A white knight benefits the:

Too much diversification has led some companies to sell off companies previously acquired during the merger boom.

The Investment Canada Act is intended to:

One potential advantage of a merger to the acquiring firm is the portfolio effect which attempts to achieve risk reduction while perhaps maintaining the rate of return for the firm.

Hostile takeovers are less common in Canada because:

The elimination of overlapping functions and the meshing of two firms' strong areas or products creates the managerial incentive for mergers known as:

The Goals and Activities 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 Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants and Derivatives

International Financial Management

Filters

Exam 20: External Growth Through Mergers

A white knight benefits the:

Too much diversification has led some companies to sell off companies previously acquired during the merger boom.

The Investment Canada Act is intended to:

One potential advantage of a merger to the acquiring firm is the portfolio effect which attempts to achieve risk reduction while perhaps maintaining the rate of return for the firm.

Hostile takeovers are less common in Canada because:

The elimination of overlapping functions and the meshing of two firms' strong areas or products creates the managerial incentive for mergers known as:

The Goals and Activities 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 Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants and Derivatives

International Financial Management

Filters