Question 1

A hostile merger is typically accomplished through

Accepted Answer

A)   an exchange of the acquirer's stocks and bonds.
B)   a cash purchase.
C)   a tender offer.
D)   an exchange of the acquirer's stock. C

Question 2

Holding companies simply are corporations that have voting control of one or more other corporations and the companies they control are often referred to as subsidiaries.

Accepted Answer

A) True 
 B)False  True

Question 3

may result in expansion of operations in an existing product line and elimination of a competitor.

Accepted Answer

A)   Vertical merger
B)   Horizontal merger
C)   Congeneric merger
D)   Conglomerate merger B

Question 4

results from the combination of firms in the same line of business.

Accepted Answer

A)   Horizontal growth
B)   Congeneric growth
C)   Conglomerate diversification
D)   Vertical growth

Question 5

A vertical merger is a merger of two firms in the same line of business.

Accepted Answer

A) True 
 B)False

Question 6

A vertical merger may result in expansion of operations in an existing product line and elimination of a competitor.

Accepted Answer

A) True 
 B)False

Question 7

Business combinations are used by firms to externally expand in order to achieve all of the following objectives EXCEPT

Accepted Answer

A)   to increase common stock outstanding.
B)   to acquire needed assets.
C)   to increase productive capacity.
D)   to increase liquidity.

Question 8

A white knight is a takeover defense in which a firm issues securities that give their holders certain rights that become effective when a takeover is attempted and that make the target firm less desirable to a hostile acquirer.

Accepted Answer

A) True 
 B)False

Question 9

Primary motives for merging include growth or diversification, synergy, fund raising, increased managerial skill or technology, tax considerations, increased ownership liquidity, and defense against takeovers.

Accepted Answer

A) True 
 B)False

Question 10

The firm in a merger transaction that attempts to merge or takeover another company is called the

Accepted Answer

A)   target company.
B)   holding company.
C)   conglomerate.
D)   acquiring company.

Question 11

Primary motives for merging include growth or diversification, synergy, fund raising, increased managerial skill or technology, tax considerations, increased ownership liquidity, and defense against takeovers.

Accepted Answer

A) True 
 B)False

Question 12

The synergy of mergers includes the economies of scale resulting from the merged firms' lower overhead.

Accepted Answer

A) True 
 B)False

Question 13

Greater control over the acquisition of raw materials or the distribution of finished goods is an economic benefit of

Accepted Answer

A)   congeneric merger.
B)   horizontal merger.
C)   conglomerate merger.
D)   vertical merger.

Question 14

In defending against a hostile takeover, the strategy that involves the target firm creating securities that give their holders certain rights that become effective when a takeover is attempted is called the strategy.

Accepted Answer

A)   golden parachute
B)   shark repellent
C)   poison pill
D)   greenmail

Question 15

A conglomerate merger is a merger combining firms in unrelated businesses.

Accepted Answer

A) True 
 B)False

Question 16

Firms' motives to merge include growth or diversification, synergy, fundraising, tax considerations, and defense against takeover.

Accepted Answer

A) True 
 B)False

Question 17

A occurs when the operations of the acquiring and target firms are combined in order to achieve economies and thereby cause the performance of the merged firm to exceed that of the pre- merged firm.

Accepted Answer

A)   financial merger
B)   operating merger
C)   strategic merger
D)   hostile takeover

Question 18

Popular takeover defense methods include white knights, poison pills, greenmail and golden parachutes.

Accepted Answer

A) True 
 B)False

Question 19

In defending against a hostile takeover, the strategy that involves the target firm finding a more suitable acquirer and prompting it to compete with the initial hostile acquirer to take over the firm is called the strategy.

Accepted Answer

A)   greenmail
B)   white knight
C)   poison pill
D)   golden parachute

Question 20

A horizontal merger is a merger in which one firm acquires another firm in the same general industry but neither in the same line of business nor a supplier or customer.

Accepted Answer

A) True 
 B)False

Exam 23: Future Value of 1 at Compound Interest

A hostile merger is typically accomplished through

Holding companies simply are corporations that have voting control of one or more other corporations and the companies they control are often referred to as subsidiaries.

may result in expansion of operations in an existing product line and elimination of a competitor.

results from the combination of firms in the same line of business.

A vertical merger is a merger of two firms in the same line of business.

A vertical merger may result in expansion of operations in an existing product line and elimination of a competitor.

Business combinations are used by firms to externally expand in order to achieve all of the following objectives EXCEPT

A white knight is a takeover defense in which a firm issues securities that give their holders certain rights that become effective when a takeover is attempted and that make the target firm less desirable to a hostile acquirer.

Primary motives for merging include growth or diversification, synergy, fund raising, increased managerial skill or technology, tax considerations, increased ownership liquidity, and defense against takeovers.

The firm in a merger transaction that attempts to merge or takeover another company is called the

Primary motives for merging include growth or diversification, synergy, fund raising, increased managerial skill or technology, tax considerations, increased ownership liquidity, and defense against takeovers.

The synergy of mergers includes the economies of scale resulting from the merged firms' lower overhead.

Greater control over the acquisition of raw materials or the distribution of finished goods is an economic benefit of

In defending against a hostile takeover, the strategy that involves the target firm creating securities that give their holders certain rights that become effective when a takeover is attempted is called the strategy.

A conglomerate merger is a merger combining firms in unrelated businesses.

Firms' motives to merge include growth or diversification, synergy, fundraising, tax considerations, and defense against takeover.

A occurs when the operations of the acquiring and target firms are combined in order to achieve economies and thereby cause the performance of the merged firm to exceed that of the pre- merged firm.

Popular takeover defense methods include white knights, poison pills, greenmail and golden parachutes.

In defending against a hostile takeover, the strategy that involves the target firm finding a more suitable acquirer and prompting it to compete with the initial hostile acquirer to take over the firm is called the strategy.

A horizontal merger is a merger in which one firm acquires another firm in the same general industry but neither in the same line of business nor a supplier or customer.