international corporate finance

Topics: Mergers and acquisitions, Corporate finance, Stock Pages: 41 (6160 words) Published: December 8, 2013
Chapter 025 Mergers and Acquisitions
Multiple Choice Questions
1. The complete absorption of one company by another, wherein the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity, is called a: A. merger.
b. consolidation.
c. tender offer.
d. spinoff.
e. divestiture.

SECTION: 25.1
TOPIC: MERGER
TYPE: DEFINITIONS

2. A merger in which an entirely new firm is created and both the acquired and acquiring firms cease to exist is called a:
a. divestiture.
B. consolidation.
c. tender offer.
d. spinoff.
e. conglomeration.

SECTION: 25.1
TOPIC: CONSOLIDATION
TYPE: DEFINITIONS

3. A public offer by one firm to directly buy the shares of another firm is called a: a. merger.
b. consolidation.
C. tender offer.
d. spinoff.
e. divestiture.

SECTION: 25.1
TOPIC: TENDER OFFER
TYPE: DEFINITIONS

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Chapter 025 Mergers and Acquisitions

4. An attempt to gain control of a firm by soliciting a sufficient number of stockholder votes to replace existing management is called a:
a. tender offer.
B. proxy contest.
c. going-private transaction.
d. leveraged buyout.
e. consolidation.

SECTION: 25.1
TOPIC: PROXY CONTEST
TYPE: DEFINITIONS

5. A business deal in which all publicly owned stock in a firm is replaced with complete equity ownership by a private group is called a:
a. tender offer.
b. proxy contest.
C. going-private transaction.
d. leveraged buyout.
e. consolidation.

SECTION: 25.1
TOPIC: GOING-PRIVATE TRANSACTION
TYPE: DEFINITIONS

6. Going-private transactions in which a large percentage of the money used to buy the outstanding stock is borrowed is called a:
a. tender offer.
b. proxy contest.
c. merger.
D. leveraged buyout.
e. consolidation.

SECTION: 25.1
TOPIC: LEVERAGED BUYOUT
TYPE: DEFINITIONS

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Chapter 025 Mergers and Acquisitions

7. An agreement between firms to cooperate in pursuit of a joint goal is called a: a. consolidation.
b. merged alliance.
c. joint venture.
d. takeover project.
E. strategic alliance.

SECTION: 25.1
TOPIC: STRATEGIC ALLIANCE
TYPE: DEFINITIONS

8. An agreement between firms to create a separate, co-owned entity established to pursue a joint goal is called a:
a. consolidation.
b. strategic alliance.
C. joint venture.
d. merged alliance.
e. takeover project.

SECTION: 25.1
TOPIC: JOINT VENTURE
TYPE: DEFINITIONS

9. The positive incremental net gain associated with the combination of two firms through a merger or acquisition is called:
a. the agency conflict.
b. goodwill.
c. the merger cost.
d. the consolidation effect.
E. synergy.

SECTION: 25.4
TOPIC: SYNERGY
TYPE: DEFINITIONS

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Chapter 025 Mergers and Acquisitions

10. The payments made by a firm to repurchase shares of its outstanding stock from an individual investor in an attempt to eliminate a potential unfriendly takeover attempt are referred to as:
a. a golden parachute.
b. standstill payments.
C. greenmail.
d. a poison pill.
e. a white knight.

SECTION: 25.7
TOPIC: GREENMAIL
TYPE: DEFINITIONS

11. A financial device designed to make unfriendly takeover attempts unappealing, if not impossible, is called:
a. a golden parachute.
b. a standstill agreement.
c. greenmail.
D. a poison pill.
e. a white knight.

SECTION: 25.7
TOPIC: POISON PILL
TYPE: DEFINITIONS

12. Corporate charter provisions allowing existing stockholders to purchase stock at some fixed price in the event of a hostile outside takeover attempt are called: a. pac-man defenses.
b. shark repellent plans.
c. golden parachute provisions.
d. greenmail provisions.
E. share rights plans.

SECTION: 25.7
TOPIC: SHARE RIGHTS PLANS
TYPE: DEFINITIONS

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Chapter 025 Mergers and Acquisitions

13. The sale of a portion of a firm's assets, operations, or divisions to a third party is referred to as a:
a....
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