Mergers And Acquisitions And Financial Distress

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Question 1

Free

Multiple Choice

Which of the following is defined as a transaction in which two firms combine to form a single firm?

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Merger

Synergy

Acquisition

Assignment

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Question 2

Free

Multiple Choice

Which of the following is defined as the purchase of one firm by another firm?

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Merger

Synergy

Acquisition

Assignment

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Question 3

Free

Multiple Choice

Which of the following is a type of merger in which an entirely new firm is created?

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Composition

Synergy

Consolidation

Assignment

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Question 4

Free

Multiple Choice

Which of the following is a type of merger in which two firms that sell the same products in different market areas are combined?

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Vertical

Conglomerate

Product extension

Market extension

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Question 5

Free

Multiple Choice

Which of the following is a combination of a firm with a supplier or distributor?

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Vertical merger

Conglomerate merger

Product extension merger

Market extension merger

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Question 6

Multiple Choice

Which of the following combines two companies that have no related products or markets?

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Vertical merger

Conglomerate merger

Product extension merger

Market extension merger

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Question 7

Multiple Choice

Which of the following is a combination of firms that sell different, but somewhat related, products?

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Vertical merger

Conglomerate merger

Product extension merger

Market extension merger

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Question 8

Multiple Choice

Which of these terms is defined as the value of the combined firms being greater than the sum of the value of the two firms individually?

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Composition

Synergy

Consolidation

Conglomerate

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Question 9

Multiple Choice

Which of the following is NOT one of the sources of value enhancing synergy in a merger?

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Revenue enhancement

Cost reduction

Tax considerations

Higher cost of capital

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Question 10

Multiple Choice

Which of the following is defined as a merged firm's ability to generate synergistic cost savings through the joint use of inputs in producing multiple products?

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Economies of scale

Economies of scope

Economies of synergy

X-efficiencies

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Question 11

Multiple Choice

Which of the following is defined as a merged firm's advantage over smaller firms if cuts associated with the merger lower the firm's operating costs of production?

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Economies of scale

Economies of scope

Economies of synergy

X-efficiencies

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Question 12

Multiple Choice

Which of the following is cost savings usually attributed to superior management skills and other difficult-to-measure managerial factors?

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Economies of scale

Economies of scope

Economies of synergy

X-efficiencies

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Question 13

Multiple Choice

Which of the following is NOT a tax consideration motive for a merger?

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Tax gains from net operating losses

Tax gains from used debt capacity

Tax gains from used equity capacity

Tax gains from surplus firms

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Question 14

Multiple Choice

Which of these makes the following a true statement? Diversification resulting from a merger can:

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make the debt of the merged firm more risky, thus lowering the cost of capital.

make the debt of the merged firm less risky, thus lowering the cost of capital.

make the debt of the merged firm less risky, thus raising the cost of capital.

None of the options make the statement true.

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Question 15

Multiple Choice

Which of the following is the most extreme type of financial distress for a business?

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Business failure

Economic failure

Technical insolvency

Business extension

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Question 16

Multiple Choice

Which of the following is the type of financial distress in which the return on a firm's assets is less than the firm's cost of capital?

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Business failure

Economic failure

Technical insolvency

Business extension

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Question 17

Multiple Choice

Which of the following is the type of financial distress in which a firm's operating cash flows are not sufficient to pay its liabilities as they come due?

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Business failure

Economic failure

Technical insolvency

Business extension

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Question 18

Multiple Choice

Which of the following is the termination of the firm as a going concern in which assets are sold and any proceeds go to pay off the firm's creditors?

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Liquidation

Assignment

Composition

Consolidation

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Question 19

Multiple Choice

Which of the following is a voluntary liquidation proceeding that passes the liquidation of the firm's assets to a third party that is designated as the assignee or trustee?

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Liquidation

Assignment

Composition

Consolidation

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Question 20

Multiple Choice

Which of these is the person who liquidates the firm's assets through a private sale or public auction and then distributes any proceeds from the sale to the firms' creditors and stockholders?

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Assignor

Grantor

Trustor

Trustee

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