Test Bank For - Management 5 th Edition By Eugene Brigham, Joel...

Test Bank For Essentials of Financial Management 5 th Edition By Eugene Brigham, Joel Houston, Jun-Ming Hsu, Yoon Kee Kong, Bany-Ariffin (All Chapters 1-21, 100% Original Verified, A+ Grade) All Chapters Arranged

Reverse: 21-1

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Chapter 21. Mergers and Acquisitions.True / False

• In a merger with true synergies, the post-merger value exceeds the sum of the separate companies' pre-merger values.
• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: EASY

REFERENCES: 21-1 Rationale for Mergers

QUESTION TYPE: True / False

TOPICS: Synergistic merger

KEYWORDS: Bloom’s: Knowledge

• Synergistic benefits can arise from a number of different sources, including operating economies of scale, financial

economies, and increased managerial efficiency.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: EASY

REFERENCES: 21-1 Rationale for Mergers

QUESTION TYPE: True / False

TOPICS: Sources of synergy

KEYWORDS: Bloom’s: Comprehension

• Most defensive mergers occur as a result of managers' actions to maximize shareholders' wealth.
• True
• False

ANSWER: False

POINTS: 1

DIFFICULTY: EASY

REFERENCES: 21-1 Rationale for Mergers

QUESTION TYPE: True / False

TOPICS: Defensive mergers

KEYWORDS: Bloom’s: Knowledge

• A conglomerate merger occurs when two firms with either a horizontal or a vertical business relationship combine.
• True
• False

ANSWER: False

POINTS: 1

DIFFICULTY: EASY

REFERENCES: 21-2 Types of Mergers

Brigham & Houston, Essentials of Financial Management, Asia Edition, Fifth Edition. © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Page 1 3 / 4

Chapter 21. Mergers and Acquisitions.

QUESTION TYPE: True / False

TOPICS: Conglomerate merger

KEYWORDS: Bloom’s: Knowledge

• Merger activity is likely to heat up when interest rates are high because target firms can expect to receive an especially

high premium over the pre-announcement stock price.

• True
• False

ANSWER: False

POINTS: 1

DIFFICULTY: EASY

REFERENCES: 21-3 Level of Merger Activity

QUESTION TYPE: True / False

TOPICS: Mergers and interest rates

KEYWORDS: Bloom’s: Comprehension

• A company seeking to fight off a hostile takeover might employ the services of an investment banking firm to develop a

defensive strategy.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: EASY

REFERENCES: 21-4 Hostile Versus Friendly Takeovers

QUESTION TYPE: True / False

TOPICS: Defensive tactics

KEYWORDS: Bloom’s: Knowledge

• Post-merger control and the negotiated price paid by the acquirer are two of the most important issues in the terms to

merger agreements.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: EASY

REFERENCES: 21-5 Merger Analysis

QUESTION TYPE: True / False

TOPICS: Merger terms

KEYWORDS: Bloom’s: Comprehension

• Since the primary rationale for any operating merger is synergy, in planning such mergers the development of accurate

pro forma cash flows is the single most important task.

• True

Brigham & Houston, Essentials of Financial Management, Asia Edition, Fifth Edition. © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Page 2

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