Question 1

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

Accepted Answer

C

Question 2

Combination of two or more organisations in the same industry is called…..
A)Horizontal merge
B)Vertical merger
C)Concentric
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

………is the combination of two or more organisation in a related industry but do not offer same product.
A)Horizontal
B)Vertical
C)Concentric
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
A)Conglomerate
B)Forward
C)Vertical
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 ……
A)Goodwill
B)Merger cost
C)Consolidation effect
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

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

Accepted Answer

The answer of ……. is the ratio in which an...

Question 7

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

Accepted Answer

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

Question 8

PAC stands for…..
A)Persons acting on concert
B)Promoters acting in concert
C)Public announcement for consolidation
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.
A)Flip- in
B)Flip over
C)Spin out
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.
A)Golden parachute
B)Poison pills
C)Dual class stock
D)Super majority announcements

Accepted Answer

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

Question 11

White knight relates to ……
A)Green mail
B)Crown Jewel
C)Litigation
D)People pill

Accepted Answer

A white knight is a friendly investor or company that acquires a corporation at risk of a hostile takeover, often preserving the company's valuable assets, known as "crown jewels."

Question 12

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

Accepted Answer

Poison pill is a pre-offer takeover defence. It involves issuing new shares to existing shareholders at a discounted price, making it more expensive for the acquirer to acquire a controlling stake in the target company.

Question 13

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

Accepted Answer

A white knight is a strategy used after a takeover offer has been made, where the target company seeks out a more friendly firm to acquire them instead of the hostile bidder.

Question 14

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

Accepted Answer

The process of converting a subsidiary into an independent entity is referred to as a "spin off." This involves a parent company distributing shares of the subsidiary to its shareholders, thus creating a separate, independent company.

Question 16

LBO stands for….
A)Leveraged borrow outs
B)Leveraged buy outs
C)Leveraged buy offs
D)Longterm buy outs

Accepted Answer

LBO stands for Leveraged Buyouts, which is a financial transaction where a company is purchased using a significant amount of borrowed money to meet the cost of acquisition.

Question 17

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

Accepted Answer

MBO stands for Management Buy-Out, which is a transaction where the management team of a company buys the assets and operations that they manage, effectively taking control of the company.

Question 18

NOPAT stands for….
A)Net organisation profit after tax
B)Net operating profit after tax
C)Net operation profit after a term
D)None of the above

Accepted Answer

NOPAT stands for Net Operating Profit After Tax. It is a financial metric that calculates a company's potential cash earnings if it had no debt.

Question 19

IGR stands for….
A)Interest growth rate
B)Internal gearing rate
C)Internal growth rate
D)None of the above

Accepted Answer

IGR stands for Internal Growth Rate, which is a formula used by companies to estimate the highest level of growth achievable without obtaining external financing.

Question 20

SGR stands for
A)Sustainable growth rate
B)Statutory growth rate
C)Stable growth rate
D)Suitable growth rate

Accepted Answer

Sustainable growth rate (SGR) refers to the maximum rate at which a company can grow its sales, earnings, and dividends without increasing its debt or equity. It is a key indicator in financial analysis for assessing a company's growth potential while maintaining its current financial leverage.

Quiz 5: Mergers, Acquisitions, and Takeovers

…… is the process under which an existing large company purchases the business of another small company doing similar business.

Combination of two or more organisations in the same industry is called…..

………is the combination of two or more organisation in a related industry but do not offer same product.

The acquisition of a firm in the same industry, but at a different stage of the production process is called

The positive incremental net gain associated with two firms enter into a merger is called ……

……. is the ratio in which an acquiring company will offer its own shares in exchange for the target company's share during merger .

…….. isa type of takeover in which the acquiring company turns itself into a subsidiary of the purchased company.

PAC stands for…..

This strategy enables the existing shareholders of the target company to buy additional shares at a high discount rate.

This plan gives veto rights over the controlof changes to managers.

White knight relates to ……

Whichof the following is a pre offer take-over defences?

Which of the following is a post offer take- over defence?

The process by which company or organisation is divided and thereby becomes an independent business is called …..

The process of converting a subsidiary into an independent entity is called….

LBO stands for….

…..isan acquisition in which management team of the company purchases assets and operation they manage.

NOPAT stands for….

IGR stands for….

SGR stands for