Exam 18: Corporate Restructuring

In a Chapter 11 bankruptcy, a firm voluntarily enters the procedure intending a reorganization under which it can continue in business. A Chapter 7 bankruptcy, on the other hand generally results in the firm's liquidation.

When company A and company B combine to form company C, the action is referred to as a merger or an acquisition.

A reorganization in bankruptcy primarily:

A manufacturing firm purchases a retail chain that sells its products is an example of ____.

A merger of two airlines is an example of:

A parent or holding company operates acquired businesses as:

The distinction between bankruptcy and insolvency is:

Pendulum Corp. is considering making a tender offer for Poe Inc. Pendulum's management is conservative and insists that the deal make financial sense based cash flows projected no more than five years into the future, which have been estimated as follows: Year 1 2 3 4 5 Cash flow $3.4M $3.7M $4.0M $4.0M $4.2M Pendulum has also determined that the appropriate risk adjusted discount rate for the analysis is 9.0%. If Poe has 400,000 shares outstanding, what is the maximum per share price Pendulum should be willing to pay for Poe's stock?

Junk bonds became popular in the 1980s based on the idea that high risk firms failed only slightly more often than low risk firms.

Diversification achieved through a merger can reduce the variability of the earnings of the acquiring firm.

The Antitrust Laws:

The stock of a target company is considered "in play" when:

When the net income of the combined companies after a merger exceeds the sum of the net incomes prior to the merger, ____ is said to exist.

The wave of merger activity associated with hostile takeovers and corporate raiders is:

The aftermath of a leveraged buyout might include:

Which of the following is true of the fourth wave of mergers from 1981 to 1989?

The appropriate discount rate in merger analysis is:

The terms "acquisition" and "takeover" are often used to refer to a merger because the stock of the firm that goes out of existence is usually acquired by the continuing firm.

All of the following are defensive measures except:

Studies have shown that the high premiums paid in many mergers are just about always justified by increased post-merger cash flows that come from synergies and economies of scale.