521. Which of the following would not be acquired from a target company in the event of a takeover?
A. Target company equity.
B. Target company asset.
C. Target company liabilities.
D. Target company share price premium.
522. What is a leveraged buyout?
A. It is a type of joint venture.
B. It is an acquisition in which a large acquirer has leverage through bargaining power over a small target.
C. It is an acquisition which is funded from a relatively large amount of debt.
D. It is an acquisition which is funded from a relatively low amount of debt.
523. Which of the following is the correct formula for the additional cash flows from an acquisition?
A. A+B+C-D
B. A+B-C-D
C. A-B+C-D
D. A+B+C+D
524. Which of the following is not an advantage of deferred payment/earn-out?
A. May avoid ‘winner’s curse’.
B. Talents of target employees are retained, but the acquirer valuation risk is reduced, as the valuation is now contingent on performance.
C. The target remains a separate legal entity for liability purposes, which reduces liability risk.
D. There may be conflict of motives between the target and bidder, unless the target has strong incentives to maximize value for the bidder.
525. What is the most important fundamental reason for an acquiring company to acquire a target company?
A. To acquire strategic options
B. To gain economies of scale
C. To maximize acquiring firm value
D. To entrench management
526. Which of the following is not an anti-takeover defence?
A. Hubris
B. Greenmail
C. Golden Parachute
D. Scorched Earth
527. Which region has the largest amount of Mergers and Acquisitions activity and has the longest history of this type of business activity?
A. Continental Europe
B. The UK
C. The USA
D. Japan and Korea
528. If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what will be the future value of your savings?
A. Rs. 1,000
B. Rs. 1,244
C. Rs. 1,331
D. Rs. 1,464
529. In case of international business which of the given factor(s) must be considered?
A. Role of foreign exchange
B. Balance of payments
C. Attitude of Governments
D. All of the given options
530. Which of the following refers to the difference between the sale price and cost of inventory?
A. Net loss
B. Net worth
C. Markup
D. Markdown
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