Wall Street Prep Premium Exam (Latest
Updates) Questions and
Answers 100% Correct (Verified Answers)-
{Grade A}
The typical sell-side process - correct answer shorter than the buy side, buyer
secures financing, and doesn't involve id'ing potential issues to address such as
ownership and unusual equity structures, liabilities, etc.
The following happened in a recent m&a transaction: 1. Pp&e of the target company
was increased from its original book basis of $600 million to $800 million to reflect fair
market value for book purposes in accordance with the purchase method of
accounting. 2. No "step-up" for tax purposes. 3. Original tax basis of $650 million.
Assuming a corporate tax rate of 35% for book purposes, the company should record
the following - correct answer a deferred tax liability equal to $52.5 million
,An acquisition creates shareholder value: - correct answer when a company acquires
a business whose fundamental value is higher than the purchase price
• acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• no premium is offered to the current target share price
• acquirer share price at announcement is $30
• target share price at announcement is $50
• acquirer eps next year is $3.00
• target eps next year is $2.00
• acquirer has 4 thousand shares outstanding
• target has 2 thousand shares outstanding
What is the exchange ratio for the deal? - correct answer 1.7x
, • acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• no premium is offered to the current target share price
• acquirer share price at announcement is $30
• target share price at announcement is $50
• acquirer eps next year is $3.00
• target eps next year is $2.00
• acquirer has 4 thousand shares outstanding
• target has 2 thousand shares outstanding
Pushdown accounting: - correct answer refers to the establishment of a new
accounting and reporting basis in an acquired company's separate
Financial statements
Updates) Questions and
Answers 100% Correct (Verified Answers)-
{Grade A}
The typical sell-side process - correct answer shorter than the buy side, buyer
secures financing, and doesn't involve id'ing potential issues to address such as
ownership and unusual equity structures, liabilities, etc.
The following happened in a recent m&a transaction: 1. Pp&e of the target company
was increased from its original book basis of $600 million to $800 million to reflect fair
market value for book purposes in accordance with the purchase method of
accounting. 2. No "step-up" for tax purposes. 3. Original tax basis of $650 million.
Assuming a corporate tax rate of 35% for book purposes, the company should record
the following - correct answer a deferred tax liability equal to $52.5 million
,An acquisition creates shareholder value: - correct answer when a company acquires
a business whose fundamental value is higher than the purchase price
• acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• no premium is offered to the current target share price
• acquirer share price at announcement is $30
• target share price at announcement is $50
• acquirer eps next year is $3.00
• target eps next year is $2.00
• acquirer has 4 thousand shares outstanding
• target has 2 thousand shares outstanding
What is the exchange ratio for the deal? - correct answer 1.7x
, • acquirer purchases 100% of target by issuing additional stock to purchase target
shares
• no premium is offered to the current target share price
• acquirer share price at announcement is $30
• target share price at announcement is $50
• acquirer eps next year is $3.00
• target eps next year is $2.00
• acquirer has 4 thousand shares outstanding
• target has 2 thousand shares outstanding
Pushdown accounting: - correct answer refers to the establishment of a new
accounting and reporting basis in an acquired company's separate
Financial statements
