1) Which of the following describes how merging waves are similar?

a. The stock market is declining

b. New technology is introduced
c. Has high interest rates
d. Occurs during recessionary economic times
2) Which one of the following statements is correct?
a. If firm A acquires firm B then the number of shares in AB will equal the number
of shares of A plus the number of shares of B.
b. If no value is created when firm A acquires firm B, then the total value of
AB will equal the value of A plus the value of B.
c. The price-earnings ratio will remain constant as a result of an acquisition which
fails to create value.
d. An increase in the earnings per share as a result of an acquisition will increase
the price per share of the acquiring firm.
3) What element separates the several merger waves?
a. Industry concentration
b. Rate of economic growth
c. Trends in the stock market
d. Variations in interest rates
4) In a merger or acquisition, a firm should be acquired if it:.
a. generates a positive net present value to the shareholders of an acquiring
firm.
b. is a firm in a totally different line of business which will diversity the firm
c. pays a large dividend which will provide cash pass through to the acquirer.

5) How can a corporation expand geographically through mergers and

acquisitions?
a. raising shareholder dividends,
b. opening up new markets
c. Through lowering operating expenses,
d. lowering regulatory barriers, and so on

6) The main characteristics of LBOs are:

a. management incentives.
b. high debt.
c. all of the above.
d. private ownership.
7) Firm A is planning to acquire Firm B. If Firm A prefers to make a cash
offer for the merger itindicates that:
a. Firm A's managers are pessimistic about the post merger value of A.
b. Firm A's managers are optimistic about the post merger value of A.
c. Firm A's managers are neutral about the post merger value of A.
d. None of the above
8) What is meant by "synergy" in the context of mergers and acquisitions?
a. the amplified influence of several components
b. economic ideas;
c. Chemical processes;
d. the physical sciences;
9) Why would management decide to use mergers and acquisitions to achieve
diverse expansion?
a. To evade competition in the present industry;
b. To go into less profitable industries;
c. To leverage the parent company's established industry;
d. To venture into more lucrative industries than the parent company's
present industry
10) What are commonly cited reasons for mergers and acquisitions?
a. Enhancing market power
b. Collaboration for synergy
c. Strategic repositioning
d. All of these
11) If firms A is acquiring firm B and Bs shareholders are given the fraction
x of the combined firm, then the cost of this merger is:
a. Cost = PVAB - (x) PVA
b. Cost = (x)(PVAB) -PVB
c. Cost = (x)PVAB - (x) PVB .
d. Cost = PVAB - (x) PVB.
12) Why would a business think about vertical integration?
a. To lower quality maintenance;
b. To guarantee a consistent source of supply;
c. To postpone timely delivery considerations
d. To diminish supply availability;
13) What qualifies as a monopoly in economic theory?
a. Uniform goods
b. A large number of vendors and purchasers
c. Complete information
d. Just one vendor
14) In a tax-free acquisition, the shareholders of the target firm
a. Sell their shares to a qualifying entity thereby avoiding both income and capital
gains taxes.
b. Gift their shares to a tax-exempt organization and therefore have no taxable
gain.
c. Are viewed as having exchanged their shares.
d. Receive income that is considered to be tax-exempt
15) What makes a company's distribution channels essential to its success?
a. They guarantee heightened competition.
b. They result in increased manufacturing expenses.
c. They make it easier to reach customers.
d. They cause the market share to decline.
16) When a company is deciding whether to develop internally or through
mergers and acquisitions, what is the main factor to consider?
a. regulatory compliance,
b. industry diversity
c. Legal complexity,
d. strategic alignment,
17) The value of a target firm to the acquiring firm is equal to:
a. The value of the merged firm minus the value of the target firm as a separate
entity.
b. The purchase cost of the target firm.
c. The value of the target firm as a separate entity plus the incremental value
derived from the acquisition
d. The purchase cost plus the incremental value derived from the acquisition
18) What dangers come with taking over a business without prior
knowledge in the field?
a. Stronger market position
b. Improved operational effectiveness
c. Possible mishandling and overcharging
d. More profitability
19) Which of the following describes a typical M&A process step?
a. Recruiting personnel
b. Starting a new product line
c. Carrying out due diligence
d. Introducing new technology
20) In what stage do the operations and cultures of the merging firms need
to be integrated?
a. Negotiations
b. Post-merger integration
c. Due diligence
d. Finalization
21) When British Airways merged with Iberia, the Spanish airline, what
kind of merger was this?
a. Joint venture
b. Horizontal
c. Conglomerate
d. Vertical
22) In a merger or acquisition, a firm should be acquired if it:.
a. Pays a large dividend which will provide cash pass through to the acquiror.
b. Is a firm in the same line of business, in which the acquirer has expertise.
c. Generates a positive net present value to the shareholders of an acquiring
firm.
d. Is a firm in a totally different line of business which will diversity the firm
23) What Makes M&A Due Diligence Important?
a. look into the affairs of the company;
b. verify all relevant information about the company;
c. Everything mentioned above
d. weigh the opportunities and risks of a proposed transaction.
24) A reason for acquisitions is synergy. Synergy includes
a. Revenue enhancements.
b. Lower taxes.
c. Cost reductions.
d. All of the above.
25) Who gains from doing due diligence on finances?
Financial purchasers alone;
b. Corporate buyers only;
c. None of the above
d. Both types of buyers;
26) When it comes to financial due diligence, which of the following is often
excluded?
a. Quality and sustainability of profits and cash flow assessment
b. Accounting policy review;
c. Marketing strategy evaluation;
d. Internal audit method analysis;
27) Which of the following is typically the most important economy or
synergy which is sought from Mergers and Acquisitions M&A activity?
a. Economies of scale from doing away with duplication of function between
the two firms.
b. Revenue and marketing synergies from new, enhanced, or more efficient
distribution.
c. Economies of scale effects from organizational learning
d.Economies of scope from applying existing resources to new uses, at little
additional cost.
28) What is the significance of obtaining commitment from responsible
owners for future outcomes in the context of merging entities?
a. To guarantee the achievement of synergy and continuous company
performance
b. To lower employee attrition
c. To boost industry competition
d. To get government subsidies
29) What is the significance of obtaining commitment from responsible
owners for future outcomes in the context of merging entities?
a. To get government subsidies
b. To lower employee attrition
c. To guarantee the achievement of synergy and continuous company
performance
d. To boost industry competition
30) What is essential to a successful entity merger?
a. A hierarchical management structure should be established.
b. Plans should be created to accomplish corporate goals and objectives.
c. Stakeholder concerns should not be disregarded.
d. Integration should be postponed until after "day-one" of the merger.
31) In managing teams to carry out strategies for accomplishing corporate
objectives, what is an essential step?
a. Steering clear of teamwork
b. Disregarding the advancement of the team
c. Forming and supervising teams
d. Giving little direction
32) How do Mergers and Acquisitions (M&A) and Information Technology
(IT) interact?
a. By lowering the requirement for due diligence;
b. By raising regulatory barriers;
c. By lowering the requirement for post-merger integration;
d. By expediting correspondence between the concerned parties;
33) In the long run, a successful acquisition is one that:
a. enables the acquirer to diversify its asset base.
b. increases the market price of the acquirer's stock over what it would have
been without the acquisition
c. enables the acquirer to make an all-equity purchase, thereby avoiding additional
financial everage.
d. increases financial leverage
34) A merger involves the integration of businesses in which:
a. One of the merging entities becomes a fully owned subsidiary of the other.
b. None of the options provided
c. The involved entities may differ in size, competitiveness, profitability, and
market value.
d. Two businesses amalgamate to create a new entity.
35) Why is it so important to monitor choices and developments during
implementation?
a. To reduce team accountability;
b. To guarantee teams are on pace to reach objectives;
c. To erect needless barriers
d. To avoid acknowledging accomplishments;
36) The restructuring of a firm should be undertaken if __________.
a. the restructuring is expected to create value for shareholders
b. the current employees will receive additional stock options to align employee
interest
c. the restructuring is expected to increase the firm's market share power within the
industry
d. the restructuring is expected to increase earnings per share (EPS) next year
37) What effect does IT synergy have on M&A success?
a. it boosts operational efficiency and cost savings;
b. it complicates the integration process;
c. It doesn't affect M&A success in any of the following ways:
d. it lessens the requirement for IT due diligence
38) All of the following are possible motivations for firms to engage in
mergers and acquisitions except
a. Agency problems.
b. Managerial hubris.
c. To increase the stock price of the firm.
d. The potential to earn above-normal profits.
39) What role does a well-run supply chain have in the success of a merger?
a. By decreasing operational interruptions
b. Through making communication routes more difficult
c. Through raising barriers to regulations
d. By escalating cultural conflicts
40) Suppose that the market price per share of Company A is $100 and that
of Company B is $40. If A offers one-half (1/2) a share of common stock for
each share of B, the exchange ratio with respect to market prices would be
__________.
a.2.50
b.1.25
c.0.40
d.0.80
41) The purchase accounting method requires that:
a. the equity of the acquiring firm be reduced by the excess of the purchase price
over the fair market value of the target firm.
b. the excess of the purchase price over the fair market value of the target firm be
recorded as a one-time expense on the income statement of the acquiring firm
c. goodwill be amortized on a yearly basis
d. the assets of the target firm be recorded at their fair market value on the
balance sheet of the acquiring firm
42) Vertical mergers are characterized by participants:
a. None of the options given.
b. Operating across different sectors.
c. Operating within the same sector.
d. Engaged in distinct stages of the value chain.
43) Goodwill created by an acquisition:
a. affects the cash flows of the acquiring firm on an annual basis for a period of
years.
b. reduces the taxable income of the firm as it is expensed.
c. has no effect on the reported earnings of a firm when it is expensed.
d. must be reviewed each year to determine its current value to the firm.
44) What defines a vertical acquisition?
a. An acquisition where a company acquires a supplier or distributor
b. An acquisition where a company purchases another entity in a distinct industry
c. An acquisition where a company purchases a company in an entirely unrelated
sector
d. An acquisition where a company buys out a competitor within the same industry
45) If an acquisition does not create value and the market is smart, then
the:
a. earnings per share will most likely increase while the price-earnings ratio
remains constant.
b. earnings per share of the acquiring firm must be the same both before and after
the acquisition.
c. earnings per share can change but the stock price of the acquiring firm
should remain constant.
46) How does a conglomerate acquisition differ from a horizontal
acquisition?::
a. In a conglomerate acquisition, the acquiring company and target company
are in unrelated industries
b. In a horizontal acquisition, the acquiring company acquires a competitor
c. In a conglomerate acquisition, both companies are in the same industry
d. In a horizontal acquisition, the acquiring company seeks diversification
47) In a hostile takeover, how might the acquiring company approach the
target's shareholders?
a. By offering a premium for their shares
b. By obtaining the approval of the target's board of directors
c. By making a tender offer directly to the target's shareholders
d. By collaborating with the target's management
48) What is a "proxy fight" in the context of a hostile takeover?
a. A strategy to merge the two companies into a new entity
b. A legal battle between the acquiring and target companies
c. A negotiation process between the acquiring and target companies
d. A fight for control of the target company's board of directors
49) What is a hostile takeover?
a. A takeover where the acquiring company pursues the target without its
consent
b. A takeover where the target company welcomes the acquisition
c. A merger of equals between two companies
d. A takeover where the acquiring company and target company agree on the terms
50) Which of the following is a characteristic of a conglomerate acquisition?
a. The target company welcomes the acquisition
b. The acquiring company and target company are in unrelated industries c.
Both companies are in direct competition with each other
d. The acquiring company seeks to merge with a smaller competitor
51) Which party typically resists a hostile takeover attempt?
a. The regulatory authorities
b. The target company's shareholders
c. The target company's board of directors
d. The acquiring company's shareholders
52) How might a target company defend against a hostile takeover?
a. By collaborating with the acquiring company
b. By negotiating a friendly agreement
c. By welcoming the acquisition
d. By implementing a poison pill defense
53) What is a conglomerate acquisition?
a. An acquisition where a company acquires another company in a different
industry
b. An acquisition where two companies in the same industry merge
c. An acquisition where a private company goes public
d. An acquisition where a company acquires a direct competitor
54) What is the primary objective of a hostile takeover?
a. To form a merger of equals
b. To create a stronger, more competitive entity
c. To achieve a negotiated agreement between the two companies
d. To gain control of the target company without its consent
55) What potential challenge might a company face in a conglomerate
acquisition?
a. Increased competition within the same industry
b. Limited opportunities for growth and expansion
c. Difficulty integrating different corporate cultures and operations
d. Lower profitability due to decreased market share
56) Which of the following industries might a conglomerate acquisition
involve?
a. A software company acquiring a pharmaceutical company
b. An airline company acquiring a travel agency
c. A clothing retailer acquiring a competitor in the same market
d. A bank acquiring a fintech startup
57) Which of the following is a potential benefit of a conglomerate
acquisition?
a. Creating a monopoly within the same industry
b. Access to new technologies and markets
c. Streamlining operations within the same industry
d. Reducing risk by focusing on a single industry
58) Technology risk is the uncertainty that economies of scale or scope will
be realized from theinvestment in new technologies.
True
59) The mergers of Citicorp with Travelers Insurance is an example of an
attempt to exploiteconomies of scope
True
60) In a conglomerate acquisition, what is often the focus of the acquiring
company?
a. Merging with a direct competitor
b. Increasing market share in the same industry
c. Eliminating competition
d. Diversification and expansion