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 firm has arranged for a lockbox system to reduce collection time of accounts receivable. Currently the firm has an average collection period of 43 days, an average age of inventory of 50 days, and an average payment period of 10 days. The lockbox system will reduce the average collection period by 3 days by […]
Date: September 19th, 2020
Most firms employ ________ funding strategy if their sales and investments in operating assets are constant. A) aggressive B) conservative C) permanent D) seasonal ANSWER C
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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
Date: September 19th, 2020
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. […]
Date: September 19th, 2020
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
Date: September 19th, 2020
