Quiz Ch 21 – T/F Funding Structure of Management Buyouts
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: Management buyouts are financed entirely with equity by the new shareholders.
True or false: Management buyouts are financed entirely with equity by the new shareholders.
True or false: The announcement of a leveraged buyout (LBO) typically results in a decrease in the value of the target firm’s bonds.
True or false: In cash-financed mergers, the size of the merger gain does NOT impact the merger cost.
True or false: The market value of a firm is likely to surpass its stand-alone value if investors perceive the possibility of an acquisition.
True or false: The evidence suggests that investors are willing to pay a premium for diversified firms, offering a strong incentive for companies to pursue mergers.
True or false: Unrelated business segments are more likely to be spun off or carved out from the rest of the firm’s activities.
True or false: Vertical integration is a sensible strategy when two firms have a high level of interdependence.
True or false: Management is often replaced when a firm undergoes a takeover.
True or false: Merger activity was minimal during the 1980s.
True or false: Economic gain from mergers occurs when the combined value of two firms is greater than their individual values.