Quiz Ch 31 – T/F Description of a Conglomerate Merger
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: The acquiring firm buys a closely related company in a conglomerate merger.
True or false: The acquiring firm buys a closely related company in a conglomerate merger.
True or false: A new asset category called goodwill is established under the purchase method of merger accounting.
True or false: It seems that in hostile takeovers, most of the gains are realized by the target companies.
True or false: Pre-offer defenses include litigation, asset restructuring, and liability restructuring.
True or false: The cost of the merger is calculated as the difference between the cash payment and the standalone value of Firm B when Firm A acquires Firm B for cash.
The calculation for the gain from a merger is expressed as Gain = PVAB − (PVA + PVB).
True or false: Merging for diversification is a highly reasonable decision for two companies.
True or false: A poison pill is crafted to ensure the protection of shareholders’ rights.
True or false: A merger between two companies is viable if their resources complement each other.
What are the tax implications associated with a taxable merger?