Fin 444 Final Exam Solution Guide (A+ guaranteed)

1) Name three of the ten Change Forces. (8 points)

2) The greatest change force is technological changes – True or False? (4 points)

3) What is the difference between Merger and Tender Offer? (8 points)

4) What are the eight Federal Securities Laws? (8 points)

5) M&A activities include:  (8 points)


A) Joint Ventures
B) Divestitures
C) Carve-outs
D) Spin-offs
E) All of the above

6) Define: Horizontal Merger (5 points)

7) Define: Vertical Merger (5 points)

8) Define: Conglomerate Merger (5 points)

9) Define: Hostile Takeovers (5 points)

10) Name two characteristics that a firm may possess that make it vulnerable to a takeover (6 points)

11) The study of valuation is important for M&A because a major cause of acquisition failures is that the bidder pays too much. True or False (4 points)

12) The leading methods used in the valuation include: (6 points)
A) comparable companies or comparable transactions approach
B) spreadsheet approach
C) formula approach
D) All of the above

13) Valuation is central to the merger process? True of False (4 points)
True

14) Firms should merge only if the value to shareholders will be
enhanced. True or False (4 points)

15) Internal control mechanisms for effective corporate governance include the board of directors, ownership concentration, and executive compensation. True or False (4 points)

16) Outside control mechanisms for effective corporate governance include stock price performance, institutional investors, proxy contests, and takeovers. True or False (4 points)

17) List three reasons why mergers fail.  (12 points)