Combination of two or more companies involved engaged in different staged of activities

is known as

Horizontal Merger

Vertical Merger

Concentric Merger

Conglomerate Merger

Which one of following is excluded in calculating break-up value per share??

Intangible assets

Cash and cash equivalent items

Fixed Assets

Current Assets

Feasibility analysis for cash payment in takeovers and mergers has to be done keeping
in view of one of the following factors of acquiring company:

Net asset value per share

Price earnings ratio

Liquidity

Past record of company

Firm A is valued at Rs 200 lakh and firm B at Rs 130 lakh. If the two firms
combine, the present value of estimated cost savings would be Rs 30 lakh. Firm A
pays Rs 150 lakh to acquire firm B. What will be the net gain from the merger?

NPR 20 lakh

NPR 10 lakh

NPR 30 lakh

NPR 70 lakh

Which of the following structuring focuses on the management and internal corporate
governance structures??

Spin off

Sell off

Financial restructuring

Organizational restructuring

The reorganization of the financial assets and liabilities of the company is known as:

Financial restructuring
 Organizational restructuring

Management buyout

Leveraged buyout

Birks Co has just paid a dividend of Rs 32 per share. The return on equities in this risk
class is 16%. What is the value of each share, assuming constant dividends for 3 years
and then growth of 4% pa to perpetuity?

Rs. 249

Rs. 309

Rs. 349

Rs. 71

Book value of asset is

Based on historic cost accounting principles

the alternative cost of setting up a similar business from scratch

the minimum acceptable price that the seller is willing to accept in

equal to the value of intangible assets

Acquirer Company’s equity capital is NPR 20 lakh. The companies have arrived at an
understanding to maintain debt equity ratio at 0.25:1 of the combined company. Pre-
merger debt outstanding of the companies stood at NPR 2 lakh (acquirer) and NPR 1
lakh (target). The marketable securities for both were NPR 4 lakh. The maximum
amount of cash that an acquirer can offer to target company is:

Rs. 6 Lakh

Rs. 5 lakh

Rs. 3 lakh

Rs. 8 lakh

Fair value institutional criteria considers which of the following for calculating the fair
value:

Past Record of company

Break-up value

Earning Capacity value

All of the above

Combination of two or more companies involved engaged in unrelated business is known

Vertical Merger

Concentric Merger

Conglomerate Merger

The elements considered for fair price are the break-up value per share, notational value
based on earning and ……..

Assets

Liabilities

Average earning

Market price per share

Market expectation regarding dividend and capital appreciation important factor in

Value of assets

Share price

Shareholder value

Dividend payout ratio

The value of acquiring company and target company is NPR 500 lakh and NPR 250 lakh
respectively. Value of synergy as per due diligence is NPR 150 lakhs and merger cost
NPR 60 lakh. The value of combined company is:

NPR 750 lakh

NPR 900 lakh

NPR 840 lakh

NPR 960 lakh

Firm A is valued at Rs 300 lakh and firm B at Rs 240 lakh. If the two firms
combine, the present value of estimated cost savings would be Rs 50 lakh. Firm A
pays Rs 270 lakh to acquire firm B. What will be the net gain from the merger?

NPR 20 lakh

NPR 30 lakh

NPR 50 lakh

NPR 60 Lakh

A method of restructuring where new legal entity is created but shares are issued to
existing shareholder on pro rata basis is:

Equity carve out

Spin off

Leveraged buyout

Which of the following value represents the alternative cost of setting up a similar
business from scratch:

Book Value

Replacement value

Net realization value

Present value

Acquirer Company’s equity capital is NPR 40 lakh. The companies have arrived at an
understanding to maintain debt equity ratio at 0.30:1 of the combined company. Pre-
merger debt outstanding of the companies stood at NPR 4 lakh (acquirer) and NPR 2
lakh (target). The marketable securities for both were NPR 8 lakh. The maximum
amount of cash that an acquirer can offer to target company is:

Rs. 8 lakh

Rs. 12 lakh

Rs. 20 lakh

Rs. 14 Lakh

The enterprise formed by coming together two or more participants for special purpose
for a limited duration is known as:

Spin off

Equity carve out

Joint venture

Divesture

Which one of the following is the most difficult phase in merger and acquisitions?

Post-merger integration

Negotiation

Pre-acquisition review

Valuing target company

Buyouts that are cash transactions where cash is borrowed by acquiring firm
and the debt financing represents 50% or more of the purchase price is
known as:
Joint Venture
 Management buyout
Leveraged buyout
Master Limited Partnership
In which of the following mode of LBO financing repayment of the debt is
required in the form of one bulled payment at the end of loan tenure:
Senior debt
Loan Stock
Subordinated debt
Equity shares
A defense strategy against hostile takeover where the target company
acquires its own shares from the acquirer is known as:
Golden Parachutes
White Knight
Greenmail
Macaroni Defense
The special purpose vehicle set up by two independent parties for a specific
purpose is known as:
Partnership
Licensing arrangements
Strategic Alliance
Management buyout

The debt where the specific assets of the company as kept as security is
known as
Subordinated debt
 Mezzanine finance
Loan Stock
Senior debt
………. were the first type of MLPs to be formed and invested in the
projects in the oil industry:
Roll out MLP
Startup MLP
Roll up MLP
Liquidation MLP
An employee stock ownership plan that does not require to comply with
minimum schedules for vesting and vesting is added each year of service is
known as:
Cliff vesting
Graded Vesting
Non Leveraged ESOP
Leveraged ESOP
Among the following stages of the industries life cycle, in which stage the
dominant business model’s efficiency gives companies a competitive
advantage over competition:
Maturity stage
Decline stage
Fragmentation stage
Shakeout stage
The evaluation of the proposed merger that determine the kind of fit that
exit between two companies is known as:
Negotiation
 Valuation
Due diligence
Integration
The approaches that is used as selection criteria for the evaluation of merger
and acquisition opportunities which does considers the risk posture of
acquisition i.e. portfolio effect is:
Present value analysis
Break-up value per share
Market price per share
Capital Assets Pricing Model
The riskiest modes of LBO financing among the parts of LBO’s capital
structure is:
Preference shares
Loan Stock
Equity shares
Senior Debt
A defense technique against takeover where the target company’s
management seeks out another potential acquirer to not lose the
management of company is known as:
Golden Parachutes
White Knight
Poison Pill
Macaroni Defense
Which of the following is not considered as the alternative to Joint
Venture’s as expansion strategy option?
Partnership
 Licensing arrangements
Strategic Alliance
Management buyout
In which of the following mode of LBO financing repayment of the debt is
required in the form equal installments over the period of loan tenure:
Subordinated debt
Loan Stock
Senior debt
Mezzanine finance
The master limited partnership that initially privately held and later offers
its interest to the public in order to finance internal growth is:
Roll out MLP
Startup MLP
Roll up MLP
Liquidation MLP
An employee stock ownership plan that must comply with minimum
schedules for vesting is known as:
Cliff vesting
Graded Vesting
Non Leveraged ESOP
Leveraged ESOP
Which of the following is considered as a type of intermediate financing
between debt and equity in LBO financing?
Preference Shares
Loan Stock
 Mezzanine finance
Senior debt
Among the following stages of the industries life cycle, in which stage
competitors begin realizing business opportunities in the emerging business
industry:
Maturity stage
Decline stage
Fragmentation stage
Shakeout stage
The approaches that is used as selection criteria for the evaluation of merger
and acquisition opportunities which does not considers the risk posture of
acquisition i.e. portfolio effect is:
Present value analysis
Break-up value per share
Market price per share
Capital Assets Pricing Model