Corporate Restructuring

This question bank verified by Studydeets
All Questions
Filter by:
Question 1
Free
Multiple Choice

Forms of business combinations include:

Choose correct answer/s
A

mergers

B

consolidations

C

holding companies and consolidations

D

mergers, consolidations, and holding companies

Check answer
Question 2
Free
Multiple Choice

Which of the following terms are not associated with mergers and acquisitions?

Choose correct answer/s
A

white knight

B

tender offers

C

greenmail

D

declaration of bankruptcy

Check answer
Question 3
Free
Multiple Choice

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

Choose correct answer/s
A

goodwill

B

synergy

C

leverage

D

greenmail

Check answer
Question 4
Free
Multiple Choice

The reasons why a company may choose external growth by merger over internal growth include

Choose correct answer/s
A

economies of scale

B

more rapid growth

C

tax considerations and rapid growth

D

economies of scale, tax considerations, and more rapid growth

Check answer
Question 5
Free
Multiple Choice

When the market value of a company's common stock is below the replacement value of the firm's net assets, this company is frequently referred to as a possible ____ .

Choose correct answer/s
A

white knight

B

leveraged buyout

C

takeover candidate

D

conglomerate

Check answer
Question 6
Multiple Choice

The acquisition of a company in which the buyer borrows a large amount of the purchase price, using the purchased assets as collateral for a large portion of the borrowings, is known as a ____ .

Choose correct answer/s
A
pooling of interests
B
leveraged buyout
C
conglomerate merger
D
tender offer
To unlock the question
Question 7
Multiple Choice

In general, the greatest economies of scale are possible with ____ mergers.

Choose correct answer/s
A
conglomerate
B
vertical
C
horizontal
D
integrated
To unlock the question
Question 8
Multiple Choice

A combination of two or more companies in which neither competes directly with the other and no buyer-seller relationship exists is known as a

Choose correct answer/s
A
conglomerate merger
B
vertical merger
C
horizontal merger
D
takeover
To unlock the question
Question 9
Multiple Choice

A combination of two or more companies that have a buyer-seller relationship with each other is known as a

Choose correct answer/s
A
conglomerate merger
B
vertical merger
C
horizontal merger
D
takeover
To unlock the question
Question 10
Multiple Choice

What is a form of business combination in which a company purchases all or a controlling block of another company's common shares and the two companies become affiliated?

Choose correct answer/s
A
horizontal merger
B
vertical merger
C
conglomerate
D
holding company
To unlock the question
Question 11
Multiple Choice

A combination of two or more companies that compete directly with each other is known as a

Choose correct answer/s
A
conglomerate merger
B
vertical merger
C
horizontal merger
D
takeover
To unlock the question
Question 12
Multiple Choice

The major methods typically used to value merger candidates include all the following except

Choose correct answer/s
A
comparative price-earnings ratio method
B
adjusted book value method
C
discounted cash flow method
D
bottom line comparison method
To unlock the question
Question 13
Multiple Choice

The basic methods used in combining financial accounts in a merger include all of the following except the

Choose correct answer/s
A
goodwill consolidation method
B
purchase method
C
pooling of interests method
D
book value method
To unlock the question
Question 14
Multiple Choice

In the ____ method of combining financial accounts in a merger, the acquired company's assets are recorded on the acquiring company's books at their cost (net of depreciation) when originally acquired.

Choose correct answer/s
A
goodwill consolidation
B
purchase
C
pooling of interests
D
EVA
To unlock the question
Question 15
Multiple Choice

In the ____ method for combining financial accounts in a merger, the total value paid or exchanged for the acquired company's assets is recorded on the acquiring company's books.

Choose correct answer/s
A
pooling of interests
B
goodwill consolidation
C
purchase
D
book value
To unlock the question
Question 16
Multiple Choice

In a ____ form of business combination, a parent-subsidiary relationship exists between the acquiring and acquired companies.

Choose correct answer/s
A
leveraged buyout
B
holding company
C
consolidation
D
leveraged buyout or consolidation
To unlock the question
Question 17
Multiple Choice

A form of business combination in which two (unaffiliated) companies contribute financial and/or physical assets, as well as personnel, to a new company to engage in some economic activity is known as a ____ .

Choose correct answer/s
A
joint venture
B
conglomerate merger
C
merger
D
consolidation
To unlock the question
Question 18
Multiple Choice

Employee Stock Ownership Plans (ESOPs) are useful instruments for financing leveraged buyouts because in an ESOP transaction

Choose correct answer/s
A
employees have a greater voice in the final decision
B
lenders can offer below market interest rates
C
ESOPs can be used only when employees take over management functions
D
ESOPs attract greater external equity investments
To unlock the question
Question 19
Multiple Choice

In a(n) ____ common stock in a division or subsidiary is distributed to shareholders of the parent company on a pro rata basis.

Choose correct answer/s
A
spin-off
B
reverse LBO
C
equity carve-out
D
tender offer
To unlock the question
Question 20
Multiple Choice

In the ____ method of accounting for mergers, the total value paid or exchanged for the acquired firm's assets is recorded on the acquiring company's books.

Choose correct answer/s
A
purchase
B
goodwill
C
pooling of interests
D
stockholder's equity
To unlock the question