Deck 5: Mergers, Acquisitions, and Takeovers

Question 1

…… is the process under which an existing large company purchases the business of another small company doing similar business.

A)Merger
B)Acquisition
C)Absorption
D)Take over

Answer 1

Absorption

Question 2

Combination of two or more organisations in the same industry is called…..

A)Horizontal merge
B)Vertical merger
C)Concentric
D)Conglomerate

Answer 2

Horizontal merge

Question 3

………is the combination of two or more organisation in a related industry but do not offer same product.

A)Horizontal
B)Vertical
C)Concentric
D)Conglomerate

Answer 3

Concentric

Question 4

The acquisition of a firm in the same industry, but at a different stage of the production process is called

A)Conglomerate
B)Forward
C)Vertical
D)Horizontal

Question 5

The positive incremental net gain associated with two firms enter into a merger is called ……

A)Goodwill
B)Merger cost
C)Consolidation effect
D)Synergy

Question 6

……. is the ratio in which an acquiring company will offer its own shares in exchange for the target company's share during merger .

A)Swap ratio
B)Price- earnings ratio
C)Exchange ratio
D)Enterprise value to sales ratio

Question 7

…….. isa type of takeover in which the acquiring company turns itself into a subsidiary of the purchased company.

A)Bailout takeover
B)Reverse takeover
C)Backflip
D)Conglomerate

Question 8

PAC stands for…..

A)Persons acting on concert
B)Promoters acting in concert
C)Public announcement for consolidation
D)Public acting concert

Question 9

This strategy enables the existing shareholders of the target company to buy additional shares at a high discount rate.

A)Flip- in
B)Flip over
C)Spin out
D)Spin off.

Question 10

This plan gives veto rights over the controlof changes to managers.

A)Golden parachute
B)Poison pills
C)Dual class stock
D)Super majority announcements

Question 11

White knight relates to ……

A)Green mail
B)Crown Jewel
C)Litigation
D)People pill

Question 12

Whichof the following is a pre offer take-over defences?

A)Crown Jewel
B)People pill
C)Poison pill
D)PAC man defence

Question 13

Which of the following is a post offer take- over defence?

A)Poison pills
B)Golden parachute
C)White knight
D)Dual class stock

Question 14

The process by which company or organisation is divided and thereby becomes an independent business is called …..

A)Spin out
B)Spin off
C)Split off
D)Sell off

Question 15

The process of converting a subsidiary into an independent entity is called….

A)Spin out
B)Split off
C)Sell off
D)Spin off

Question 16

LBO stands for….

A)Leveraged borrow outs
B)Leveraged buy outs
C)Leveraged buy offs
D)Longterm buy outs

Question 17

…..isan acquisition in which management team of the company purchases assets and operation they manage.

A)LBO
B)MBO
C)Demerger
D)Stubs

Question 18

NOPAT stands for….

A)Net organisation profit after tax
B)Net operating profit after tax
C)Net operation profit after a term
D)None of the above

Question 19

IGR stands for….

A)Interest growth rate
B)Internal gearing rate
C)Internal growth rate
D)None of the above

Question 20

SGR stands for

A)Sustainable growth rate
B)Statutory growth rate
C)Stable growth rate
D)Suitable growth rate

Question 21

Financial leverage indicates disproportionate change in taxable income as a result of change in……

A)Operating income
B)Operating leverage
C)Interest
D)Tax

Question 22

The term trading on equity is generally used for …. .…financial leverage

A)Unfavourable
B)Moderate
C)Less than 1
D)Favourable

Question 23

MOS stands for ….

A)Marginal own source
B)Money of seller
C)Margin of safety
D)Medium own source