4. Given below are eight statements. You must answer all eight. Some are True/False/PartiallyTrue and some require an analysis. Please answer the question and explain your answer since it is the argument that matters; but, be succinct. Each question is worth 4 points for a total of

a) When you acquire a firm where their activities are hard for you to monitor, you have a much better chance of creating value since there are smaller negative synergies in these types of deals. Please answer True/False/PartiallyTrue. Explain.

b) Your firm announces that you will issue $50 million in debt on top of the $200 million in debt you now have to purchase shares. Your stock (5 million shares) is trading at $80 a share. If this announcement was a surprise, and investors believe you and that the all-in relative tax advantage of debt is 10%, fill in the following table with the values you expect for each item:

	Now	After Announcement	After Execution
MV(Equity)
MV(Debt)
Number of Shares
Stock Price

c) Companies in countries where shareholders are endowed with strong rights, such as ease of takeovers and can demand extreme disclosure from management, typically pay higher dividend payout ratios. Please answer True/False/PartiallyTrue. Explain.

d) The primary reason for LBOs is for raiders to takeover companies with cheap financing. Please answer True/False/PartiallyTrue. Explain.