1. Describe a conglomerate
2. What happens to market price and market output if Staples and Office Depot merge in a particular market? Graph and show before the merger and after the merger (2 graphs).
3. When do regulators require a divestiture of assets in an M&A
4. Calculate the stock price before and after the takeover, given: the Target Company's cash flow is $3 million before the M&A and $6 million after the M&A; the cost of capital is 9% before and 11% after the M&A; the growth rate is 3% before and 4% after the M&A; the company debt is $20 million before and $30 million after the M&A; and the company has 1 million shares of stock outstanding before and after the M&A.
5. What is the stock price range of a tender offer for this company, and what will be the bid if there is another company interested in this company too.
6. Describe the costs and benefits from a M&A?
7. Describe asymmetric information in the used car market and the insurance market.
8. Describe a mixed market
9. Graph the used car market with 50/50 expectations and they are not met, then draw pessimistic expectations on this same graph (price decrease).
10. What are the results from the graph in the previous question
11. Draw used car market with pessimistic expectations that are exceeded, then draw equilibrium expectations (higher price).
12. What are the results from the graph in the previous question
13. How can the asymmetric information problem be reduced in the used car market?
14. Graph the insurance market with 50/50 expectations and they are not met, then draw pessimistic expectations on this same graph (price increase).