Question 1

&#8230;&#8230; is the process under which an existing large company purchases the business of another small company doing similar business.&#10;A)Merger&#10;B)Acquisition&#10;C)Absorption&#10;D)Take over

Accepted Answer

Absorption&#10;

Question 2

Combination of two or more organisations in the same industry is called&#8230;..&#10;A)Horizontal merge&#10;B)Vertical merger&#10;C)Concentric&#10;D)Conglomerate

Accepted Answer

A horizontal merger occurs when two or more companies operating in the same industry or producing similar products or services combine. This type of merger is aimed at increasing market share, reducing competition, or achieving economies of scale.

Question 3

&#8230;&#8230;&#8230;is the combination of two or more organisation in a related industry but do not offer same product.&#10;A)Horizontal&#10;B)Vertical&#10;C)Concentric&#10;D)Conglomerate

Accepted Answer

Concentric diversification involves a combination of businesses in a related industry, but they do not offer the same products. This strategy allows a company to leverage its existing capabilities or markets into new areas.

Question 4

The acquisition of a firm in the same industry, but at a different stage of the production process is called&#10;A)Conglomerate&#10;B)Forward&#10;C)Vertical&#10;D)Horizontal

Accepted Answer

Vertical integration refers to the acquisition of a company operating at a different stage of the same industry's production process. This strategy can help a company control more aspects of its supply chain, reduce costs, and improve efficiency.

Question 5

The positive incremental net gain associated with two firms enter into a merger is called &#8230;&#8230;&#10;A)Goodwill&#10;B)Merger cost&#10;C)Consolidation effect&#10;D)Synergy

Accepted Answer

Synergy refers to the concept that the value and performance of two companies combined will be greater than the sum of the separate individual parts. This means that the merger will create additional value through increased efficiency or effectiveness, leading to a positive incremental net gain.

Question 6

&#8230;&#8230;. is the ratio in which an acquiring company will offer its own shares in exchange for the target company's share during merger .&#10;A)Swap ratio&#10;B)Price- earnings ratio&#10;C)Exchange ratio&#10;D)Enterprise value to sales ratio

Accepted Answer

The answer of &#8230;&#8230;. is the ratio in which an...

Question 7

&#8230;&#8230;.. isa type of takeover in which the acquiring company turns itself into a subsidiary of the purchased company.&#10;A)Bailout takeover&#10;B)Reverse takeover&#10;C)Backflip&#10;D)Conglomerate

Accepted Answer

In a backflip takeover, the acquiring company becomes a subsidiary of the purchased company.

Question 8

PAC stands for&#8230;..&#10;A)Persons acting on concert&#10;B)Promoters acting in concert&#10;C)Public announcement for consolidation&#10;D)Public acting concert

Accepted Answer

PAC stands for Persons acting on concert.

Question 9

This strategy enables the existing shareholders of the target company to buy additional shares at a high discount rate.&#10;A)Flip- in&#10;B)Flip over&#10;C)Spin out&#10;D)Spin off.

Accepted Answer

Flip-in is a poison pill strategy that allows existing shareholders of a target company to buy more shares at a discount, diluting the holdings of a potential acquirer and making a takeover more expensive.

Question 10

This plan gives veto rights over the controlof changes to managers.&#10;A)Golden parachute&#10;B)Poison pills&#10;C)Dual class stock&#10;D)Super majority announcements

Accepted Answer

The answer of This plan gives veto rights over the...

Question 11

White knight relates to &#8230;&#8230;&#10;A)Green mail&#10;B)Crown Jewel&#10;C)Litigation&#10;D)People pill

Accepted Answer

The answer of White knight relates to &#8230;&#8230;&#10;A)Green mail&#10;B)Crown Jewel&#10;C)Litigation&#10;D)People...

Question 12

Whichof the following is a pre offer take-over defences?&#10;A)Crown Jewel&#10;B)People pill&#10;C)Poison pill&#10;D)PAC man defence

Accepted Answer

The answer of Whichof the following is a pre offer...

Question 13

Which of the following is a post offer take- over defence?&#10;A)Poison pills&#10;B)Golden parachute&#10;C)White knight&#10;D)Dual class stock

Accepted Answer

The answer of Which of the following is a post...

Question 14

The process by which company or organisation is divided and thereby becomes an independent business is called &#8230;..&#10;A)Spin out&#10;B)Spin off&#10;C)Split off&#10;D)Sell off

Accepted Answer

The answer of The process by which company or organisation...

Question 15

The process of converting a subsidiary into an independent entity is called&#8230;.&#10;A)Spin out&#10;B)Split off&#10;C)Sell off&#10;D)Spin off

Accepted Answer

The answer of The process of converting a subsidiary into...

Question 16

LBO stands for&#8230;.&#10;A)Leveraged borrow outs&#10;B)Leveraged buy outs&#10;C)Leveraged buy offs&#10;D)Longterm buy outs

Accepted Answer

The answer of LBO stands for&#8230;.&#10;A)Leveraged borrow outs&#10;B)Leveraged buy outs&#10;C)Leveraged...

Question 17

&#8230;..isan acquisition in which management team of the company purchases assets and operation they manage.&#10;A)LBO&#10;B)MBO&#10;C)Demerger&#10;D)Stubs

Accepted Answer

The answer of &#8230;..isan acquisition in which management team of...

Question 18

NOPAT stands for&#8230;.&#10;A)Net organisation profit after tax&#10;B)Net operating profit after tax&#10;C)Net operation profit after a term&#10;D)None of the above

Accepted Answer

The answer of NOPAT stands for&#8230;.&#10;A)Net organisation profit after tax&#10;B)Net...

Question 19

IGR stands for&#8230;.&#10;A)Interest growth rate&#10;B)Internal gearing rate&#10;C)Internal growth rate&#10;D)None of the above

Accepted Answer

The answer of IGR stands for&#8230;.&#10;A)Interest growth rate&#10;B)Internal gearing rate&#10;C)Internal...

Question 20

SGR stands for&#10;A)Sustainable growth rate&#10;B)Statutory growth rate&#10;C)Stable growth rate&#10;D)Suitable growth rate

Accepted Answer

The answer of SGR stands for&#10;A)Sustainable growth rate&#10;B)Statutory growth rate&#10;C)Stable...

Question 21

Financial leverage indicates disproportionate change in taxable income as a result of change in&#8230;&#8230;&#10;A)Operating income&#10;B)Operating leverage&#10;C)Interest&#10;D)Tax

Accepted Answer

The answer of Financial leverage indicates disproportionate change in taxable...

Question 22

The term trading on equity is generally used for &#8230;. .&#8230;financial leverage&#10;A)Unfavourable&#10;B)Moderate&#10;C)Less than 1&#10;D)Favourable

Accepted Answer

The answer of The term trading on equity is generally...

Question 23

MOS stands for &#8230;.&#10;A)Marginal own source&#10;B)Money of seller&#10;C)Margin of safety&#10;D)Medium own source

Accepted Answer

The answer of MOS stands for &#8230;.&#10;A)Marginal own source&#10;B)Money of...

Deck 5: Mergers, Acquisitions, and Takeovers