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UOP FIN 444 Final Exam - Mergers, Acquisition and Corporate Restructuring




Question;University of Phoenix;FIN/444 Mergers, Acquisition and;Corporate Restructuring;Final Exam;1 Point Each;Please Put all Answers on the Excel;Answer Sheet Provided;1. The pooling of interest and the purchase method are the;two methods allowed by the FASB in accounting for Mergers and Acquisitions.;A.;True;B.;False;2. FASB prefers the purchase method of accounting for;business combinations because;CEO?s;of major corporations find it more beneficial;Purchase;method allows for amortization of goodwill over a maximum of 40 years;Merger;accounting and subsequent asset values should be consistent with market;valuations;Purchase;method is more easily understood by accountants;3. Strategic planning is the responsibility of the CEO and;executive management team?;True;False;4. Which of the statements below is an essential element of;the strategic planning process;Formulation of internal organizational performance;measurements.;Formulation of mid-range programs and short-run;plans.;Analysis of company, competitors, industry, domestic;economy, and international economies.;A and;C only;All;of the above;5. Strategic planning processes can utilize formal;procedures or develop through informal communications throughout the;organization.;True;False;6. According to the study done by Jensen (1986) he found;that;Firms with;substantially high free cash flow leads to value-reducing diversification;decisions;Mergers;create cost saving synergies;Mergers Produce economies of scale;B;and C only;7. According to studies done by Hirshleifer and Png;(1989) and French and McCormick (1984) suggested that;a seller might;want to limit the competitiveness of the selling process because it can;indirectly affect the aggressiveness of any one bidder and adversely;affect the combined net gains from the transaction.;A seller might;want to promote the competitiveness of the selling process because it can;indirectly affect the aggressiveness of any one bidder and help increase;the combined net gains from the transaction;Bidders;in a takeover attempt face a potential winner?s curse;None;of the above;8. Between;1895 and 1904 what type of merger was most prevalent?;Vertical Mergers;Conglomerate Mergers;Horizontal Mergers;None of the above;9. Andrade, Mitchell, and Stafford (2001) concluded that;much of the merger activity that transpired during the ?90s was caused by;Technological;Innovations;Availability;of Junk Bonds;Capital;Markets;Deregulation;10. Which characteristics will not make a firm vulnerable;to a takeover;A.;A low stock price in;relation to the replacement cost of assets or their potential earning power (a;low q-ratio).;B. A highly liquid;balance sheet with large amounts of excess cash, a valuable securities portfolio,and significant;unused debt capacity.;Good cash flow;relative to current stock prices, low P/EPS ratios.;Subsidiaries or;properties that could be sold off that would significantly impair cash;flow.;11. Which of the following are defenses against hostile takeover;bids;A.;Classified Boards;B.;White Knight;C.;Super Majority;Amendments;D.;All of the above;E.;B and C only;12. The leading methods used in the valuation of a firm;for merger analysis are;the comparable;companies or comparable transactions approach;the;spreadsheet approach;the;formula approach;all;of the above;A;and B only;13. The;Black-Scholes option pricing model should be used;with which of the valuation techniques?;the spreadsheet;approach;the;comparable companies or comparable transactions approach;the;MBA approach;A;and B only;14. When calculating the WACC we should use which of the;following?;Book value for;both debt & equity;Market;value for both debt & equity;Book;value for debt & market value for equity;Market;value for debt & book value for equity;15. Three major types of merger motivations were;identified by Berkovitch and Narayanan (1993);synergy;hubris;operating innovations;All;of the above;A;B only;16. All;are reasons for given for merger activity except;Technological change;Economies of scale;New industries;Super Majority amendments;Deregulation and;regulation;17. Tender;offers can be either hostile or friendly;True;False;18. All;are types of mergers except;Horizontal;Vertical;Hubris;Conglomerate;19. Which;federal securities law regulates the sale of securities;Securities Act;of 1933 (SA);Securities;Exchange Act of 1934 (SEA);Public Utility;Holding Company Act of 1935 (PUHCA);Investment;Company Act of 1940 (ICA);20. This;act applies to public issues of debt securities;with a value of $5 million or more.;Securities Act;of 1933 (SA);Securities;Exchange Act of 1934 (SEA);The Trust;Indenture Act of 1939;Investment;Company Act of 1940 (ICA);21. Its stated purpose was to protect target shareholders;from swift and secret takeovers;Securities Act;of 1933 (SA);Securities Exchange;Act of 1934 (SEA);The Trust;Indenture Act of 1939;The Williams Act;22. A strategic alliance represents a combination of subsets of;assets contributed by two (or more) business entities for a specific business;purpose and a limited duration.;True;False;23. All of the following are rationales for joint ventures except;Tax;Aspects;Knowledge;Acquisition;Risk Reduction;Capital Markets;24. Strategic alliances are informal or formal decisions;or agreements between two or more firms to cooperate in some form of;relationship.;True;False;25. Defined contribution plans can be of three kinds: stock;bonus plans, profit-sharing plans, and money purchase plans.;True;False;26. Under ERISA, ESOPs are stock bonus plans or combined stock;bonus plans and money purchase plans designed to invest primarily in qualifying;employer securities.;True;False;27. According to The U.S. General Accounting Office (GAO) (1986);all of the following are types of ESOPs;except: leveraged;leveragable;nonleveraged;stock;tax;credit;28. ESOP?s can be used as an antitakeover weapons;True;False;29. The master limited partnership (MLP) is a type of limited;partnership whose shares are publicly traded.;True;False;30. The most widely used method for determining the cost of;equity is;The Dividend;Growth Model;The CAPM;The Bond Yield;Plus Equity Risk model;None of the;above;31. The risk free rate used in the CAPM is;AAA rated;corporate bond;U.S. 3 month;Treasury Bill;U.S. 10 year;Treasury Bond;Aaa rated;corporate bond;32. Which of the following is a type of share repurchase?;Clientele effect;Signaling effect;Dutch auctions;None of the;above;33. Which of the following is a form of restructuring and;divestitures?;Asset Sales;Equity;carve-outs;Spin-offs;A and C only;All of the above;34. A split-upis defined as the separation of a;company into two or more parts.;True;False;35. In all of the listed research papers, corporate;divestitures, on average, create wealth for parent shareholders.;True;False;36. In dual-class recapitalizations (DCRs), firms have created a;second class of common stock that has limited voting rights and usually a;preferential claim to the firm?s cash flows.;True;False;37. The main reason/reasons for the large levels of foreign;M&A activity is;Europe;becoming a common market place;Globalization;International;Competition;All;of the above;38. U.S. company acquisitions of non-U.S. companies are in the;range of ______% to ______% of total world M&A activity.;4%;to 7%;11%;to 15%;1%;to 3%;None;of the above;39. Growth is the most important motive for international;mergers.;True;False;40. The fraud and self-dealing revelations of new millennium resulted;in investigations by congress, the SEC, and the State Attorney General in;several jurisdictions, particularly New York and led to the Sarbanes-Oxley Act;(SOA).;True;False;41. A widely held view is that about 67% of acquisitions do not;earn the buyers? cost of capital.;True;False;42. Mergers fail for which of the following reason/reasons?;Pay;too much;Overoptimistic;expected synergies;Greenmail;All;of the above;A;and B only;43. The modern literature on long-range planning;indicates that long-range strategic planning involves at least the following;elements;A. Environmental;reassessment for new technologies, new industries, and new forms of;competitors.;B. A consideration of capabilities;missions, and environmental interactions from the standpoint of the firm and its divisions.;C. An emphasis on process rather than;particular goals or objectives.;D. An emphasis on iteration and on an;iterative feedback process as a methodology for dealing with ill-structured;problems.;E. All of the above


Paper#49072 | Written in 18-Jul-2015

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