A problem with the tender offer mechanism in a takeover is the . The term refers to a situation in which rational behavior by each individual shareholder results in shareholders as a group being worse off. If individual target shareholders (correctly) foresee that the value of their shares will be worth more after the takeover […]
In a , a diversified firm is taken over and assets or divisions are sold, so that the remaining firm is more focused and efficient. a. spin-off b. equity carve-out c. bustup takeover d. dispersal ANSWER C
Ace’s Business Forms pays 8 percent on short-term funds and 10 percent on long-term funds. Determine its annual financing costs using the trade-off strategy described: Ace’s Business Forms has seasonal financing requirements ranging from zero to $50,000 per month. Based on this range, the firm has decided to finance $25,000 per month of the seasonal […]
A firm’s financing requirements can be separated into ________. A) current liabilities and short-term funds B) current assets and fixed assets C) current liabilities and long-term debt D) seasonal and permanent ANSWER D
If the bidder in a hostile takeover faces target management resistance, as an alternative to either bidding higher or terminating the tender offer process, bidders sometimes offer target management compensation to end its resistance. This compensation is called: a. a golden parachute. b. a silver bullet. c. a gold watch. d. removal remuneration. […]
The literature emphasizes three motives for a buyout, including all of the following EXCEPT: a. to increase access to capital markets. b. to increase managerial incentives. c. to avert a takeover. d. to realize tax-reduction benefits. ANSWER A
Because managing inventory is just like managing any other investment, decisions about the level of inventory should be guided by the effect of inventory levels on sales. Indicate whether the statement is true or false ANSWER FALSE
The basic strategies for determining the appropriate financing mix are ________. A) seasonal and permanent funding B) short-term and long-term financing C) aggressive and conservative funding D) current and non-current liabilities ANSWER C
If a firm uses an aggressive financing strategy, ________. A) it increases return and increases risk B) it increases return and decreases risk C) it decreases return and increases risk D) it decreases return and decreases risk ANSWER A
One major risk a firm assumes in an aggressive financing strategy is ________. A) the possibility that collections will be slower than expected B) the possibility that long-term funds may not be available when needed C) the possibility that short-term funds may not be available when needed D) the possibility that it will run out […]
