Assignment 1

Instructions:

For multiple-choice and true/false questions, highlight the correct answer

For multiple-choice questions, only one answer is correct

Use ~50 works for free-response questions

1.What is the primary motivation where a target company is acquired for its capabilities to adapt more rapidly to environmental changes than that could be achieved if they were developed internally:

a)Financial Synergy

b)Diversification

c)Strategic Realignment

d)Market Power

2.The M&A waves could occur due to:

a)Shocks due to regulations, new distribution channels, and sustained rise in commodity prices

b)Global military conflicts

c)Consolidations when the companies have lot of cash

d)The demand of products and services increases

3.Tax considerations such as acquiring net operating loss carryforwards and investment tax credits are often excellent reasons to justify an acquisition.True or False

4.The primary advantage of a holding company is the potential leverage that can be achieved by gaining effective control of other companies' assets at a lower overall cost than would be required if the firm were to acquire 100% of the target's outstanding shares.True or False

5.Public companies are required to develop and disclose mechanisms for recovering incentive-based compensation paid during the three years prior to earnings restatements. What provision does this refer to?

a.Volcker Rule

b.Clawbacks

c.Financial Stability Oversight Council

d.Capital Requirements

6.Antitrust guidelines involve all of the following except for:

a)Market definition

b)Market concentration

c)Potential adverse competitive effects

d)The market value of the acquirer