The merger of J.P. Morgan and Bank One is an example of:
(I) Cross-border merger
(II) Horizontal merger
(III) Conglomerate merger
(IV) Vertical merger
Answer: B
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Firm A has proposed to acquire Firm B at a price of $20 per share for Firm B's stock. Calculate the gain from the merger.
Answer: A
11,000 - 10,000 - 400 = 600
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Compensation paid to top management in the event of a takeover is called a:
Answer: B
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The following mergers have been blocked on antitrust grounds except:
Answer: D
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A modification of the corporate charter that requires 80% shareholder approval for takeover is called a(n):
Answer: C
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Company A now acquires B by offering one (new) share of A for every two shares of B (that is,after the merger, there are 2500 shares of A outstanding). If investors are aware that there are no economic gains from the merger, what is the price-earnings ratio of A's stock after the merger?
Answer: B
After merger: EPS = [(2000)(10) + (1000)(10)]/2500 = 12;
Price = [(2000)(10) + (1000)(50)]/2500 = 100; P/E ratio = 8.3
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The following are good reasons for mergers:
(I) Surplus funds
(II) Eliminating inefficiencies
(III) Complementary resources
(IV) Increasing earnings per share (EPS)
Answer: C
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What are the tax consequences of a taxable merger?
Answer: C
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Giant Co. is considering the acquisition of Well Known Inc. Both companies produce closely related products, but Giant Co. is a considerably larger firm. Giant Co. will use cash-only financing in its attempt to capitalize on the brand value of Well Known Inc. This scenario would most likely result in a__________ merger
Answer: C
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Firm A is planning to acquire Firm B. If Firm A prefers to make a cash offer for the merger it indicates that:
Answer: A
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