#2 During negotiations over the method of payment to be made by the acquirer, which of the following issues would least likely be considered? A) The distribution of the risk and reward from the transaction. B) The relative valuations of the firms involved. C) How the capital structure of the surviving firm will be affected. D) The relative tax-effect on the acquiring firm’s shareholders.
Mumu, lets focus on what’s important, Black Swan was correct ok, this doesn’t happen all that often, hold on while I bask in this.
#3 Dan Berger, an analyst for Romulus Capital Management Inc. (RCMI), is talking with a colleague, Amy Woods, about the benefits of including corporate governance assessments in the firm’s valuation models. Berger makes the following statements: Statement 1: Although the results are inconclusive in emerging markets, companies in developed countries that have strong corporate governance systems have provided shareholders with higher returns than companies with weak governance system. Statement 2: A weak corporate governance system can cause a company to go bankrupt. In regard to Berger’s statements, Woods should: A) agree with both Statements. B) disagree with Statement 1, but agree with Statement 2. C) disagree with both Statements. D) agree with Statement 1, but disagree with Statement 2.
B? (For #2) Slow down Pinkie.
hahaa…i love how pinkman posted his first question…and then waited for someone else to confirm the answer…before throwing in Q2…! anyway…for Q2 - none of the above…oh wait…
#4 The principal-agent problem can best be described as: A) the agent may act for the well being of management rather than that of the stakeholders. B) the agent may act for his own well being rather than that of the principal. C) the agent may act for the well being of stakeholders rather than that of the principal. D) the agent may act for the well being of the principal rather than that of the stakeholders.
B for #3? I don’t like the part about inconcolusive in emerging markets.
#3 A
B for #4, the amount of B’s here is making me think at least one of these is wrong. Jesus Pink, slow down.
#4 B
For two, I’m definitely torn between A and B, but that inconclusive result in emerging markets just seems weird, I feel like strong corp govt should be most important in emerging markets.
2 B 3 B 4 B right?
2 D 3 B 4 B
2 was a toughie.
ok…I don’t agree with 2D - …i thought relative tax effects on shareholders were considered! sigghhh
#5 The quick change oil industry has been in a consolidation phase for about a decade, during which time the number of firms has shrunk from more than 50 to 15. An analyst is evaluating one of the remaining 15 firms as an acquisition target, and has come up with the following estimated acquisition prices: Methods of Analysis Price per Share Discounted CF $50 Comparable Company $48 Comparable Transaction $57 Under the circumstances, which of these estimates is most likely to represent the ultimate acquisition cost, and why? A) Comparable transaction, because a sufficient number of transactions have occurred for intrinsic value to be relatively well-understood by market participants. B) Comparable company, because there is a large enough sample to ensure that valuation is correct, on average. C) Discounted cash flow (CF), because this considers expectations for the future as well as current data. D) Comparable company, because it is market based and provides a sound estimate of the fair stock price.
A?? guessing here
I like A
#5 A #6 Achieving international business objectives is sometimes used as the rationale for a merger. Which of the following are least likely to be valid objectives that can be realized from a cross-border merger? The merger: A) achieves a reduction in exchange rate exposure. B) provides the ability to work around trade barriers. C) gives the acquiring firm the ability to use technology in new markets. D) results in better support for current international clients.
6.)A