1 Which of the following restructuring activities does not result in an expansion of a firm?

A. Joint Ventures
B. Mergers
C. Divestitures
D. Acquisitions

2 The merger of J.P. Morgan and Bank One is an example of

A. Cross Border Merger
B. Horizontal Merger
C. Vertical Merger
D. Conglomerate

3 Forms of business combination includes

A. Mergers
B. Consolidations
C. holding companies and consolidations
D. mergers, consolidations, and holding companies D

4 The way in which merger and acquisitions (M&As) occur do not include:
A. Divercification
B. Conglomerate merger
C. Horizontal Merger
D. Vertical Merger

5 The ‘good’ reasons for M&As do not include:

A. Complementing business strategies
B. Supporting value added growth
C. Stopping competitor merging
D. Increasing earnings per share

6 Justifications for M&As do not include:

A. To increase risk
B. To gain economy of scale
C. To enter new market
D. To achieve synergy

7 Which accounting standard apply to merger and acquisition

A. AS -3
B. AS-14
C. AS-2
D. AS-10

8 The complete absorption of one company by another, wherein the acquiring firm retains
A. merger.
B. consolidation.
 C. tender offer.
D. spinoff.
E. divestiture

9 A public offer by one firm to directly buy the shares of another firm is called a:
A. merger.
B. consolidation.
C. tender offer.
D. spinoff.
E. divestiture.

10 The sale of a portion of a firm's assets, operations, or divisions to a third party is referred
A. liquidation
B. divestiture
C. merger
D. allocation
E. resturcturing

11 ____________is defined as combination of two or more companies into a single company.

A. Takeover
B. Merger
C. Acquisition
D. None

12 What is the need of restructuring?

A. It is done as a part of routine process
B. It is done according to whims and fancies of the management.
C. To flatten organization so that it could encourage culture of initiatives and innovations
D. It is compulsory for every firm at periodic intervals

13 Increase in financial return due to high debt and tax shield are main advantage of
A. LBO
B. MBO
C. MLPs
D. ESOPs

14 What is the initial process in merger, buyout or restructuring?

A. Valuation of the target company
B. b. Stock price movement of the target company
C. c. Market capitalization of the target company
D. d. Efficiency of the management of the target company

15 One of the conditions in ______ is, the business of the transferor company is intended to be
A. Expansion
 B. Merger
C. MBO
D. LBO

16 If the merger & takeover is done through negotiation with the consent of target compani
A. Hostile takeover
B. Friendly Takeover
C. Takeover bid
D. Hostile bid

17 What is excluded in buy back routes?

A. From existing shareholders on proportionate basis
B. Open Market Operations
C. Takeover bid
D. Repurchase of share issued through employees share option

18 ______ is a process through which capital structure is changed, labour readjustment is ma

A. Demerger
B. Acquisition
C. merger
D. Restrucutring

19 _______is the act of acquiring company effective control by one company over assets or ma
A. Takeover
B. Merger
C. Acquistion
D. Restructring

20 While planning for mergers and acquisitions, which type of visions are identified?
A. Growth & Evaluation of company capabilities
B. Growth & competition
C. Competition & expectation of stakeholder
D. Competition & organizational change

21 When is a merger said to be at a premium ? When the offer price is

A. Higher than the target firm's pre-merger market value
B. Lower than the target firm's pre-merger market value
C. Higher than the target firm's pre-merger book value
D. Lower than the target firm's pre-merger book value

22 Methods of Accounting for Amalgamations

A. The Pooling of Interest method and Payment Method
B. The purchase method and Lumpsum Method
 C. Consideration method and purchase method
D. The pooling of interest method and the purchase method

23 What is the percentage of shareholding does the equity shareholders need to hold to bec
A. 100% of the face value
B. 90% of the face value
C. 90% of the market value
D. 90% of the average of face value & merged value

24 which of following activities does not involve a change in the ownership structure
A. Share repurchase
B. Going Private
C. Exchange offer
D. Leverage Buyout

25 A merger of firms engaged at different stages of production but in same industry is called
A. Horizontal Merger
B. Verticale merger
C. Conglomerate Merge
D. Reserve Merger

26 Net present value of method of capital budgeting represent –

A. The discount value at which the net terminal value of all cash flows is zero
B. the present value of all future cash flow discounted at the cost of capital minus the cost o
C. the ratio of average annual net profit after taxes to the investment in project
D. the number of year required to recover the initial cash outflow

27 Which of the following does not show a rationale for merger?

A. Information and signaling
B. Taxes
C. Reverse Synergy
D. Market Power
E. None of the above

28 Which of the following is not a kind of ESOP?

A. Tax Credit.
B. Leveraged.
C. Leveragable.
D. Non-Leveraged.
E. None of the above.

29 The style of financing an LBO deal where cash is raised by borrowing against the compan
A. Subordinated Debt
 B. Unsecured Debt
C. Secured Debt
D. Mezzanine Money
E. None of the above

30 Which of the following is not a source of gain in a LBO transaction?

A. Tax Benefits.
B. Management Incentives.
C. Wealth Transfer Effects.
D. Efficiency Consideration.
E. None of the above.

31 Which of the follwing activity referes to a corporation buying its own shares in the open m
A. Tender Offer.
B. Negotiated Share Repurchase.
C. Open Market Share Repurchase.
D. Exchange Offer.
E. None of the above.

32 All of the following are common motives for a merger or acquisition except for
A. operating synergy
B. financial synergy
C. raising the cost of capital.
D. buying undervalued assets.

33 Vertical mergers are those in which the participants are

A. in the same industry.
B. in different industries
C. in different phases of the value chain.
D. none of the above.

34 A merger is a combination of businesses in which

A. two businesses combine to form a new business.
B. the participants are necessarily comparable in size, competitive position, profitability, an
C. one of the two firms becomes a wholly owned subsidiary of the other firm.
D. none of the above.

35 Which of the following are commonly cited reasons for M&As?

A. Synergy
B. Market power
C. Strategic realignment
D. All of the above

36 Economies of scale, market share dominance, and technological advances are reasons mo
 A. Financial acquisition
B. Strategic acquisition
C. Divestiture
D. Supermajority merger

37 When two or more companies carrying on similar business decide to combine, a new com
A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction

38 When one of the existing companies take over business of another company or companie
A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction

39 Shares received from the new company are recorded at –

A. Face value
B. Average price
C. Market value
D. None of the above

40 Which of the following statement is correct?

A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing comp
B. The amount of Goodwill or Capital Reserve is found out in the books of vendor company
C. Goodwill = Net Assets – Purchase price
D. The face value of shares of purchasing company will be taken in to account while calculat

41 If the intrinsic values of shares exchanged are not equal, the difference is paid in ...........
A. Cash
B. Debenture
C. Pref. share
D. Assets

42 In case of .............., one existing company takes over the business of another company and
A. Amalgamation
B. Absorption
C. Reconstruction
D. None of the Above

43 In amalgamation of two companies

A. Both companies lose their existence
B. Both companies continue
C. Any one company continues
D.
44 When the purchasing company bears the liquidation expenses, it will debit the expenses
 A. Vendor Company’s Account
B. Bank Account
C. Goodwill Account
D. capital reserve

45 When purchasing company pays purchase consideration, it will be debited to

A. Business purchase account
B. Assets account
C. Liquidator of selling company’s account

46 As per AS – 14 purchase consideration is what is payable to

A. Shareholders
B. Creditors
C. Debentureholders

47 Amalgamation is said to be in the nature of merger if:

A. All assets and liabilities of transferor company are taken over by the transferee company.
B. Business of transferor company is intended to be carried on by the transferee company.
C. Purchase consideration must be paid in equity shares by the transferee company excep
D. All of the above

48 For amalgamation in the nature of merger, the shareholders holding at least ______ or mor
A. 51%
B. 90%
C. 99%
D. 100%

49 When the purchasing company makes payment of the purchase consideration, it debits:
A. Business purchase account
B. Assets account
C. Vendor company's account.

50 What is a leveraged buyout?

A. it is type of joint venture
B. it is an acquisition in which large acquirer has leveraged through bargaining power over
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

51 What is the most important fundamental reason for an acquiring company to acquire a ta
A. To acquire strategic options
B To gain economies of scale
C To maximize acquiring firm value
D To entrench management

52 A horizontal merger is a merger between

A. Two or more firms from different and unrelated markets.
B Two or more firms at different stages of the production process.
C A producer and its supplier
 D Two or more firms in the same market.

53 When the purchasing company makes payment of the purchase consideration, it debits—
A. Business purchase account
B Assets account
C Vendor company's account

54 When British Airways merged with Iberia, the Spanish airline, what kind of merger was t
A. Vertical.
B Horizontal.
C Joint venture.
D Conglomerate

55 What is cash return analysis?

A. Dividend yield
B Compound annual growth rate
C Multiple of the initial cash investment
D Internal rate of return

56 The acquisition of stock has the advantage of:.

A. No shareholder meeting to vote is necessary
B Minority shareholders may exist
C Opening the bidding to others
D All of the above

57 If an acquisition is made using cash payment then the acquisition is:.

A. Taxable.
B Viewed as exchanging of shares and is not taxed.
C A tax-free transaction as no capital gains or losses are recognized
D None of the above

58 What are the tax consequences of a taxable merger?

A. Selling shareholders can defer any capital gain until they sell their shares in the merged c
B Selling shareholders must recognize any capital gain
C Depreciable value of assets will remain unchanged
D Depreciation tax shield is unchanged by merger

59 A dissident group solicits votes in an attempt to replace existing management. This is cal
A. Proxy fight
B Shareholder derivative action
C Tender offer.
D Management freeze-out
60 Compensation paid to top management in the event of a takeover is called a:.
A. Poison pill.
B Golden parachute.
C Self-tender.
D Buyout.
n an expansion of a firm?

the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity, is called a:
firm is called a:

to a third party is referred to as a:

s into a single company.

itiatives and innovations

main advantage of

company is intended to be carried on, after the amalgamation by the transferor company.
consent of target companies it is termed as:

labour readjustment is made, technology up gradation takes place etc.

ompany over assets or management of another company without any combination of companies

ions are identified?

 olders need to hold to become the equity shareholders of the transferee company if the amalgamation is in the nature of merger?

wnership structure

t in same industry is called-

lows is zero
of capital minus the cost of investment also discounted at the cost of capital
ment in project

owing against the company’s assets is termed as

BO transaction?

ts own shares in the open market at the going at a going price just as any other investor might buy the corporation's share

er or acquisition except for

e position, profitability, and market capitalization.

e other firm.

al advances are reasons most likely to be offered to justify a __

cide to combine, a new company is formed, it is known as ..................

her company or companies, it is known as ...........

books of purchasing company only

books of vendor company only.

n to account while calculating purchase consideration.

fference is paid in ...........

s of another company and no new company is formed.

it will debit the expenses to

l be debited to

by the transferee company.

the transferee company.
ransferee company except for fraction shares.

olding at least ______ or more of the equity shares of the transferor company becomes the equity shareholders of the transferee compa

e consideration, it debits:

ugh bargaining power over small target

unt of debt.

ng company to acquire a target company?

e consideration, it debits—

what kind of merger was this?

heir shares in the merged company

g management. This is called a:.

ver is called a:.
n the nature of merger?
poration's share
ers of the transferee company.