Perhaps the best circumstance that would lead to gains for the shareholders of both the bidder and the target in a takeover is when a well-managed firm takes over a poorly managed firm. Thus, the greatest gains in those takeovers in which the bidder has a (i) Tobin’s q ratio (is well managed) and the […]
Date: September 19th, 2020
The bidder in a takeover generally should take advantage of temporary anonymity to purchase shares of the target before its intentions are publicly known and the target firm’s price rises. Such initial purchases establish a _. a. foothold b. leghold c. armhold d. toehold ANSWER D
Date: September 19th, 2020
Adong’s Fishing Products is analyzing the performance of its cash management. On average, the firm holds inventory for 65 days, pays its suppliers in 35 days, and collects its receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Adong currently pays 10 percent for its financing. (Assume […]
Date: September 19th, 2020
A risk of the ________ financing strategy is unpredictable interest expense. A) aggressive B) conservative C) permanent D) seasonal ANSWER A
Date: September 19th, 2020
A legitimate means of averting an unintended transfer of wealth to creditors in a merger is to: a. decrease leverage. b. reduce the volatility of operating profits. c. offer a guarantee to the separate firms’ creditors. d. increase leverage. 11.According to the hypothesis, in an acquisition or a takeover the bidder’s management overvalues the target […]
Date: September 19th, 2020
In a __, both firms cease to exist, and a new corporation is established with a new name, a new board, and/or a new management team. a. merger b. acquisition c. consolidation d. buyout ANSWER C
Date: September 19th, 2020
The ________ financing strategy requires a firm to pay interest on excess funds borrowed but not needed throughout the entire year. A) aggressive B) conservative C) permanent D) seasonal ANSWER B
Date: September 19th, 2020
In a __ the bidder’s intention is to acquire the target and replace the target’s incumbent management, who vigorously resist the attempt. a. merger b. acquisition c. buyout d. hostile takeover ANSWER D
Date: September 19th, 2020
A __ occurs when a group of individuals uses cash to purchase the shares of a firm and takes ownership and control of the firm. a. buyout b. acquisition c. consolidation d. merger ANSWER A
Date: September 19th, 2020
The aggressive financing strategy is a ________ method while the conservative financing strategy is a ________ method. A) high-profit, high-risk; low-profit, low-risk B) high-profit, low-risk; low-profit, high-risk C) low-profit, high-risk; high-profit, low-risk D) low-profit, low-risk; high-profit, high-risk ANSWER A
Date: September 19th, 2020
