1/ WHO GAINS FROM DOING DUE DILIGENCE ON FINANCES?

a. Both types of buyers;

b. Corporate buyers only;

c. Financial purchasers alone;

d. None of the above

2/ ALL OF THE FOLLOWING ARE POSSIBLE MOTIVATIONS FOR FIRMS TO
ENGAGE IN MERGERS AND ACQUISITIONS EXCEPT
a. The potential to earn above-normal profits.

b. To increase the stock price of the firm.

c. Agency problems.

d. Managerial hubris.

3/ WHICH ONE OF THE FOLLOWING STATEMENTS IS CORRECT?

a. An increase in the earnings per share as a result of an acquisition will increase the
price per share of the acquiring firm.

b. The price-earnings ratio will remain constant as a result of an acquisition which fails to
create value.

c. If firm A acquires firm B then the number of shares in AB will equal the number of
shares of A plus the number of shares of B.

d. If no value is created when firm A acquires firm B, then the total value of AB will equal
the value of A plus the value of B.

4/ IF FIRMS A IS ACQUIRING FIRM B AND BS SHAREHOLDERS ARE GIVEN

THE FRACTION X OF THE COMBINED FIRM, THEN THE COST OF THIS
MERGER IS:.
a. Cost = (x)(PVAB) -PVB

b. Cost = PVAB - (x) PVB.

c. Cost = PVAB - (x) PVA

d. Cost = (x)PVAB - (x) PVB .

5/ WHAT IS MEANT BY "SYNERGY" IN THE CONTEXT OF MERGERS AND

ACQUISITIONS?
a. Chemical processes;

b. the amplified influence of several components

c. economic ideas;
d. the physical sciences;

6/ IN MANAGING TEAMS TO CARRY OUT STRATEGIES FOR ACCOMPLISHING

CORPORATE OBJECTIVES, WHAT IS AN ESSENTIAL STEP?
a. Steering clear of teamwork

b. Disregarding the advancement of the team

c. Forming and supervising teams

d. Giving little direction

7/ IN WHAT STAGE DO THE OPERATIONS AND CULTURES OF THE MERGING

FIRMS NEED TO BE INTEGRATED?
a. Due diligence

b. Post-merger integration

c. Negotiations

d. Finalization

8/ WHEN IT COMES TO FINANCIAL DUE DILIGENCE, WHICH OF THE

FOLLOWING IS OFTEN EXCLUDED?
a. Quality and sustainability of profits and cash flow assessment

b. Accounting policy review;

c. Internal audit method analysis;

d. Marketing strategy evaluation;

9/ What is a "proxy fight" in the context of a hostile takeover?::

a. A fight for control of the target company's board of directors

b. A negotiation process between the acquiring and target companies

c. A legal battle between the acquiring and target companies

d. A strategy to merge the two companies into a new entity

10/ WHAT IS ESSENTIAL TO A SUCCESSFUL ENTITY MERGER?

a. Plans should be created to accomplish corporate goals and objectives.

b. Stakeholder concerns should not be disregarded.

c. Integration should be postponed until after "day-one" of the merger.

d. A hierarchical management structure should be established.

11/ IF AN ACQUISITION DOES NOT CREATE VALUE AND THE MARKET IS

SMART, THEN THE:
a. earnings per share can change but the stock price of the acquiring firm should remain
constant.

b. earnings per share will most likely increase while the price-earnings ratio remains
constant.

c. earnings per share of the acquiring firm must be the same both before and after the
acquisition.

12/ WHAT ELEMENT SEPARATES THE SEVERAL MERGER WAVES?

a. Trends in the stock market

b. Industry concentration

c. Rate of economic growth

d. Variations in interest rates

13/ VERTICAL MERGERS ARE CHARACTERIZED BY PARTICIPANTS:

a. Operating across different sectors.

b. None of the options given.

c. Engaged in distinct stages of the value chain.

d. Operating within the same sector.

14/ SUPPOSE THAT THE MARKET PRICE PER SHARE OF COMPANY A IS $100
AND THAT OF COMPANY B IS $40. IF A OFFERS ONE-HALF (1/2) A SHARE OF
COMMON STOCK FOR EACH SHARE OF B, THE EXCHANGE RATIO WITH
RESPECT TO MARKET PRICES WOULD BE __________.
a. 2.50

b. 0.40

c. 1.25

d. 0.80

15/ WHY WOULD A BUSINESS THINK ABOUT VERTICAL INTEGRATION?

a. To guarantee a consistent source of supply;

b. To postpone timely delivery considerations

c. To diminish supply availability;

d. To lower quality maintenance;

16/ WHY WOULD MANAGEMENT DECIDE TO USE MERGERS AND

ACQUISITIONS TO ACHIEVE DIVERSE EXPANSION?
a. To go into less profitable industries;
b. To evade competition in the present industry;

c. To leverage the parent company's established industry;

d. To venture into more lucrative industries than the parent company's present industry

17/ FIRM A IS PLANNING TO ACQUIRE FIRM B. IF FIRM A PREFERS TO MAKE A

CASH OFFER FOR THE MERGER ITINDICATES THAT:
a. None of the above

b. Firm A's managers are neutral about the post merger value of A.

c. Firm A's managers are optimistic about the post merger value of A.

d. Firm A's managers are pessimistic about the post merger value of A.

18/ HOW CAN A CORPORATION EXPAND GEOGRAPHICALLY THROUGH

MERGERS AND ACQUISITIONS?
a. lowering regulatory barriers, and so on

b. opening up new markets

c. Through lowering operating expenses,

d. raising shareholder dividends,

19/ A REASON FOR ACQUISITIONS IS SYNERGY. SYNERGY INCLUDES

a. Cost reductions.

b. All of the above.

c. Revenue enhancements.

d. Lower taxes.

20/ WHAT DANGERS COME WITH TAKING OVER A BUSINESS WITHOUT

PRIOR KNOWLEDGE IN THE FIELD?
a. More profitability

b. Stronger market position

c. Improved operational effectiveness

d. Possible mishandling and overcharging

21/ IN A MERGER OR ACQUISITION, A FIRM SHOULD BE ACQUIRED IF IT:.

a. Is a firm in a totally different line of business which will diversity the firm

b. Pays a large dividend which will provide cash pass through to the acquiror.

c. Generates a positive net present value to the shareholders of an acquiring firm.

d. Is a firm in the same line of business, in which the acquirer has expertise.
22/ WHICH OF THE FOLLOWING DESCRIBES HOW MERGING WAVES ARE
SIMILAR?
a. Has high interest rates

b. New technology is introduced

c. The stock market is declining

d. Occurs during recessionary economic times

23/ GOODWILL CREATED BY AN ACQUISITION:

a. affects the cash flows of the acquiring firm on an annual basis for a period of years.

b. reduces the taxable income of the firm as it is expensed.

c. has no effect on the reported earnings of a firm when it is expensed.

d. must be reviewed each year to determine its current value to the firm.

24/ HOW DO MERGERS AND ACQUISITIONS (M&A) AND INFORMATION

TECHNOLOGY (IT) INTERACT?
a. By expediting correspondence between the concerned parties;

b. By lowering the requirement for post-merger integration;

c. By raising regulatory barriers;

d. By lowering the requirement for due diligence;

25/ 1. Which of the following is typically the most important economy or synergy
which is sought from Mergers and Acquisitions M&A activity?
a. Economies of scale effects from organizational learning

b. Economies of scale from doing away with duplication of function between the two
firms.

c. Revenue and marketing synergies from new, enhanced, or more efficient distribution.

d. Economies of scope from applying existing resources to new uses, at little additional
cost.

26/ WHAT QUALIFIES AS A MONOPOLY IN ECONOMIC THEORY?

a. Just one vendor

b. Uniform goods

c. A large number of vendors and purchasers

d. Complete information

27/ IN A TAX-FREE ACQUISITION, THE SHAREHOLDERS OF THE TARGET

FIRM
a. Are viewed as having exchanged their shares.

b. Receive income that is considered to be tax-exempt

c.Gift their shares to a tax-exempt organization and therefore have no taxable gain.

d. Sell their shares to a qualifying entity thereby avoiding both income and capital gains
taxes.

28/ WHY IS IT SO IMPORTANT TO MONITOR CHOICES AND DEVELOPMENTS

DURING IMPLEMENTATION?
a. To guarantee teams are on pace to reach objectives;

b.To erect needless barriers

c. To reduce team accountability;

d. To avoid acknowledging accomplishments;

29/ WHAT IS THE SIGNIFICANCE OF OBTAINING COMMITMENT FROM

RESPONSIBLE OWNERS FOR FUTURE OUTCOMES IN THE CONTEXT OF
MERGING ENTITIES?
a. To lower employee attrition

b. To boost industry competition

c. To get government subsidies

d. To guarantee the achievement of synergy and continuous company performance

30/ A MERGER INVOLVES THE INTEGRATION OF BUSINESSES IN WHICH:

a. One of the merging entities becomes a fully owned subsidiary of the other.

b. None of the options provided

c. The involved entities may differ in size, competitiveness, profitability, and market
value.

d. Two businesses amalgamate to create a new entity.

31/ IN THE LONG RUN, A SUCCESSFUL ACQUISITION IS ONE THAT:

a. increases financial leverage

b. enables the acquirer to diversify its asset base.

c. increases the market price of the acquirer's stock over what it would have been
without the acquisition

d. enables the acquirer to make an all-equity purchase, thereby avoiding additional

financial everage.

32/ WHICH OF THE FOLLOWING DESCRIBES A TYPICAL M&A PROCESS

STEP?
a. Introducing new technology

b. Carrying out due diligence

c. Starting a new product line

d. Recruiting personnel

33/ WHAT DEFINES A VERTICAL ACQUISITION?

a. An acquisition where a company acquires a supplier or distributor

b. An acquisition where a company purchases a company in an entirely unrelated sector

c. An acquisition where a company buys out a competitor within the same industry

d. An acquisition where a company purchases another entity in a distinct industry

34/ What is a hostile takeover?::

a. A merger of equals between two companies

b. A takeover where the acquiring company and target company agree on the terms

c. A takeover where the acquiring company pursues the target without its consent

d. A takeover where the target company welcomes the acquisition

35/ WHEN A COMPANY IS DECIDING WHETHER TO DEVELOP INTERNALLY OR

THROUGH MERGERS AND ACQUISITIONS, WHAT IS THE MAIN FACTOR TO
CONSIDER?
a. Legal complexity,

b.regulatory compliance,

c.strategic alignment,

d. industry diversity

36/ THE MAIN CHARACTERISTICS OF LBOS ARE:

a. private ownership.

b. high debt.

c. all of the above.

d. management incentives.

37/ WHAT MAKES M&A DUE DILIGENCE IMPORTANT?

a. verify all relevant information about the company;

b. weigh the opportunities and risks of a proposed transaction.

c. Everything mentioned above

d. look into the affairs of the company;

38/ In a hostile takeover, how might the acquiring company approach the target's
shareholders?::
a. By offering a premium for their shares

b. By obtaining the approval of the target's board of directors

c. By making a tender offer directly to the target's shareholders

d. By collaborating with the target's management

39/ WHAT ARE COMMONLY CITED REASONS FOR MERGERS AND

ACQUISITIONS?
a. Strategic repositioning

b. Enhancing market power

c. All of these

d. Collaboration for synergy

40/ WHAT EFFECT DOES IT SYNERGY HAVE ON M&A SUCCESS?

a. it boosts operational efficiency and cost savings;

b. It doesn't affect M&A success in any of the following ways:

c. it lessens the requirement for IT due diligence

d. it complicates the integration process;

41/ How does a conglomerate acquisition differ from a horizontal acquisition?::

a. In a conglomerate acquisition, the acquiring company and target company are in

unrelated industries

b. In a conglomerate acquisition, both companies are in the same industry

c. In a horizontal acquisition, the acquiring company acquires a competitor

d. In a horizontal acquisition, the acquiring company seeks diversification

42/ Which party typically resists a hostile takeover attempt?::

a. The regulatory authorities

b. The acquiring company's shareholders

c. The target company's board of directors

d. The target company's shareholders

43/ THE PURCHASE ACCOUNTING METHOD REQUIRES THAT:

a. goodwill be amortized on a yearly basis

b. the assets of the target firm be recorded at their fair market value on the balance
sheet of the acquiring firm

c. the excess of the purchase price over the fair market value of the target firm be
recorded as a one-time expense on the income statement of the acquiring firm

d. the equity of the acquiring firm be reduced by the excess of the purchase price over
the fair market value of the target firm.

44/ WHAT MAKES A COMPANY'S DISTRIBUTION CHANNELS ESSENTIAL TO

ITS SUCCESS?
a. They guarantee heightened competition.

b. They cause the market share to decline.

c. They result in increased manufacturing expenses.

d. They make it easier to reach customers.

45/ WHAT IS THE SIGNIFICANCE OF OBTAINING COMMITMENT FROM

RESPONSIBLE OWNERS FOR FUTURE OUTCOMES IN THE CONTEXT OF
MERGING ENTITIES?
a. To boost industry competition

b. To get government subsidies

c. To lower employee attrition

d. To guarantee the achievement of synergy and continuous company performance

46/ THE VALUE OF A TARGET FIRM TO THE ACQUIRING FIRM IS EQUAL TO:.

a. The purchase cost plus the incremental value derived from the acquisition

b. The purchase cost of the target firm.

c. The value of the target firm as a separate entity plus the incremental value derived
from the acquisition

d.The value of the merged firm minus the value of the target firm as a separate entity.

47/ Which of the following is a characteristic of a conglomerate acquisition?::

a. The acquiring company seeks to merge with a smaller competitor

b. The target company welcomes the acquisition

c. The acquiring company and target company are in unrelated industries

d. Both companies are in direct competition with each other

48/ WHEN BRITISH AIRWAYS MERGED WITH IBERIA, THE SPANISH AIRLINE,
WHAT KIND OF MERGER WAS THIS?
a. Horizontal
b. Conglomerate

c. Joint venture

d. Vertical

49/ THE RESTRUCTURING OF A FIRM SHOULD BE UNDERTAKEN IF

__________.
a. the restructuring is expected to create value for shareholders

b. the current employees will receive additional stock options to align employee interest

c. the restructuring is expected to increase the firm's market share power within the
industry

d. the restructuring is expected to increase earnings per share (EPS) next year

50/ WHAT ROLE DOES A WELL-RUN SUPPLY CHAIN HAVE IN THE SUCCESS
OF A MERGER?
a. By decreasing operational interruptions

b. By escalating cultural conflicts

c. Through making communication routes more difficult

d. Through raising barriers to regulations

51/IN A MERGER OR ACQUISITION, A FIRM SHOULD BE ACQUIRED IF IT:.

a. pays a large dividend which will provide cash pass through to the acquirer.

b. is a firm in a totally different line of business which will diversity the firm

c. generates a positive net present value to the shareholders of an acquiring firm.