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LOS b: Explain the common motivations behind M&A activity.
Q1. Which of the following motives for mergers least likely makes economic sense?
A) Surplus funds and vertical integration.
B) Diversification and reduced borrowing costs.
C) Complementary resources and eliminating inefficiencies.
Q2. Which of the following statements concerning M&A activity is most accurate? Mergers based upon a desire to diversify usually do:
A) not make sense from the shareholders’ standpoint, but may make sense from the management’s standpoint.
B) make sense from the shareholders’ standpoint, and also usually make sense from the management’s standpoint.
C) not make sense from the shareholders’ standpoint, and do not make sense from the management’s standpoint.
Q3. Merger synergies are usually realized from:
A) increasing market share.
B) decreasing costs and/or increasing revenues.
C) merger tax benefits.
Q4. Achieving international business objectives is sometimes used as the rationale for a merger. Which of the following are least likely to be valid objectives that can be realized from a cross-border merger? The merger:
A) provides the ability to work around trade barriers.
B) achieves a reduction in exchange rate exposure.
C) gives the acquiring firm the ability to use technology in new markets.
Q5. Which of the following is least likely a criticism of merging purely for diversification purposes?
A) Increasing the size of the firm helps provide job security for management.
B) Diversification does not increase the overall value of the company.
C) Empirical evidence finds a diversification discount to conglomerates. | 
发表于 2009-3-3 15:25
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