1. On average the operating margins of the combined business in the post-merger years

Select one:

a.Stay the same

b.Are higher than in the pre-merger years

c.Are lower than in the pre-merger years

2. When a merger is announced, in general, one would see

Select one:

a.Both the acquirer and the target's stock price declines

b.The acquirer's stock price declines

c.The target's stock price declines

3.In a business combination, when the acquisition price is set, the appraised value of the target (the acquired) company's identified intangible assets will

a.Decrease the value of its goodwill

b.Have no effect on the goodwill

c.Increase the value of its goodwill

4.Who is the seller of the target company in a business mergers and acquisition transaction?

a.The CEO of the target company

b.The shareholders of the target company

c.The chairman of the target company

d.The board of directors of the target company

5. After a leverage buyout is completed:

Select one:

a.The combined business will have lots of debt

b.The acquirer will pay off the debt

c.The acquirer will proceed and raise more debt

d.The mergerco will pay off the debt

6. Which of the following statements best describes the "due diligence" performed before a business acquisition?

Select one:

a.The due duligence process provides part of the basis for the acquirer to determine the value of the assets to be acquired

b.The due diligence process is focused on the integrity of the value of the assets rather than liabilities reported by the target company (the acquired)

c.The due diligence process provides the foundatin for the acquirer to determine the discount rate to be used in business valuation

7. EF company wants to buy target: TTT Company. TTT's stocks are listed on the stock exchange for $10 per share, and TTT has 100,000 shares outstanding. Assume that the value of all TTT's identifiable assets are reflected in its stock price. In addition, on TTT's balance sheet, TTT has assets of $800,000, and shareholders' equities of $500,000. DEF estimates that TTT has goodwill of $200,000. What is DEF's possible purchase price for TTT?

Select one:

a.$1,000,000

b.$800,000

c.$1,200,000

8. Based on the literature survey by Renneboog and Vansteenkiste (2019), which of the following is reported by prior studies?

Select one:

a.Bidders in hostile takeovers in general pay a lower acquisition premium

b.Hostile takeovers in general have higher long-run performance post-merger than friendly mergers

c.Bidders in hostile takeovers in general project a higher value of synergies

9.Which of the following is NOT related to the synergies in a business combination?

Select one:

a.Combined company may have a lower total expense then the sum of the two separate companies

b.Combined company may have higher sales revenue than the sum of the two separate companies

c.Combined companies may show a higher asset book value on its balance sheet

10.Based on the literature survey by Renneboog and Vansteenkiste (2019), studies have found that when comparing the long-run operating performance of the combined business:

Select one:

a.Combined businesses on average have lower operating performance using measures of earnings-based metrics; while they have higher performance using measures of cash-based metrics

b.Using the accounting performance to measure the long-run performance of business combinations always provides a better picture than using the stock performance

c.The losers in the acquisition bidding games on average have worse operating performance than do the bidder which won the bids

11.When Andrade, Mitchell, and Stafford (2001) analyze the long-term performance of business combinations, they find that

Select one:

a.Acquisitions financed with stock have higher long-term stock performance than those that are financed with cash

b.Acquisitions financed with cash have higher long-term stock performance than those financed with stock

c.Acquisitions made by growth (glamour) companies have higher long-term stock performance than those made by value companies

12.Which of the following is not a reason that some intangible assets are NOT stated on the balance sheet?

Select one:

a.Advertising expenses are expensed when incurred

b.The company does not capitalize its R&D expenses

c.Potential synergies may arise when the company is acquired

13. n a hostile takeover:

Select one:

a.The acquirer gives the target company's shareholders a tender offer to buy target company stocks

b.The acquirer gives the board of directors the business takeover proposal

c.The acquirer sends a team of professionals to do due diligence at the target company

14. Which of the following is part of the process of a leverage buyout?

Select one:

a.The mergerco exchanges shares with the target company and becomes the holding company of the target

b.The target company raises debts before merging into the mergerco

c.The mergerco raises debt before merging with the target company

d.The mergerco raises equity before merging into the mergerco

15. Which of the following is NOT the purpose of a due diligence in business mergers and acquisitions transaction?

Select one:

a.To discuss with target company's suppliers regarding the post-merger harmonization process

b.To estimate the amount of off-balance sheet liabilities

c.To estimate the synergies to be produced by the business combination

d.To gather information regarding the value of the target company's assets

Clear my choice