Q1. Which of the following statements concerning mergers and acquisitions is tru

Question

Q1.

Which of the following statements concerning mergers and acquisitions is true?
I. Mergers of firms of equal size usually have better outcomes than mergers of firms of different sizes
II. Acquisitions of small private firms usually result in better outcomes than acquisitions of public firms
III. Growth-based mergers are usually less successful than cost-based mergers

Select one:

a.  I only

b.  I and II only

c. I and III only

d. II and III only

e.  I, II, and III

Q2.

Which of the following statements is true concerning the use of mergers to reduce cyclicality and volatility?

I. The merger of large, public firms is a cost-effective way for shareholders to shed firm-specific risk due to cyclicality and volatility
II. The merger of a large firm with a small, private firm may reduce cyclicality and volatility risk for the small firm's owner.
III. Mergers that reduce cyclicality and volatility may still result in additional costs that outweigh the benefits

Select one:

A. I only

B. I and II only

C. I and III only

D. II and III only

E. I, II, and III

F. None of the above

Q3.

Which of the following requires shareholder approval from both firms?

I. A tender offer
II. A merger
III. A consolidation

Select one:

A. I only

B. I and II only

C. I and III only

D. II and III only

E. I, II, and III

F. None of the above

Explanation / Answer

3. A tender offer does not require shareholder approval from both firms. A tender offer is an offer to purchase some or all of shareholders' shares in a corporation. The price offered is usually at a premium to the market price.

A merger and consolidation require shareholder approval from both firms. A merger is a deal to unite two existing companies into one new company. Both parties have to agree on the terms of the deal to get merged. Consolidation also requires both the parties to agree on the terms of the deal.

Answer is option D.

Please post other questions separately. Thanks.

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