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##### Finance Multiple Choice Set

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Question;Company A offers \$30 per share to acquire Company B. Company's B estimated value of equity is \$50 million, it has debt of 5 million, and outstanding shares of 2 million. This will probably result in:no change in Company B's stock pricea decrease in Company B's stock pricean increase in Company A's stock pricea decrease in Company A's stock pricenone of the above In a financial merger:the merged companies combine operationsEquity is used to finance the mergerDebt is used to finance the mergerthe merged companies do not combine operationsnone of the aboveDelta Airlines and Northwest Airlines merged in 2008. This merger is an example of:a vertical merger a horizontal mergera conglomerate mergermore information is needed to answer this questionnone of the aboveDelta airlines acquired a refinery in Pennsylvania in 2012. This is an example of:a vertical mergera horizontal mergera conglomerate mergermore information is needed to answer this questionnone of the aboveCompany A is interested in acquiring Company B. Estimated present value of Company B is \$1 billion.Company B has 50 million shares of stock outstanding and no debt. Company B's book value is \$22.50.Without considering possible synergies, what is the maximum price per share that Company A should offer?\$16.25\$22.50\$20.00\$25.25none of the aboveThe December Treasury bond futures contract has a quoted price of 95'18 and the implied interest rate is 3.2% (semiannual). If annual interest rates go up by 1.00 percentage point, what is the value of one contract?\$85,504\$ 69,591\$76,939\$95,523none of the aboveTwo companies are evaluating a possible swap. Company A can issue floating ?rate debt at LIBOR + 1%, and it can issue fixed rate debt at 9%. Company B can issue floating?rate debt at LIBOR + 1.5%, and it can issue fixed?rate debt at 9.4%. If A issues floating ?rate debt and B issues fixed ?rate debt, and then they engage in the following swap: A will make a fixed 7.95% payment to B, and B will make a floating?rate payment equal to LIBOR to A. Which of the following statements is correct?The swap is advantageous to A, but not to BThe swap is advantageous to B, but not to AThe swap is advantageous to both A and BThe swap is not advantageous to either A or Bnone of the above"The June Treasury bond futures contract has a quoted price of 102'12. Are current market interest rates higher or lower than the standardized rate on a futures contract?higher, because the contract is selling at a discounthigher, because the contract is selling at a premiumlower, because the contract is selling at a premiummore information is required to answer this questionNone of the above answers is correctThe June Treasury bond futures contract has a quoted price of 102'12. What is the current value of one contract in dollars?90,18090,563102,120102,375none of the aboveThe June Treasury bond futures contract has a quoted price of 102'12. What is the implied annual interest rate?5.80%2.90%5.85%3.05%none of the above

Paper#48630 | Written in 18-Jul-2015

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