FINA 415 MERGERS AND ACQUISITIONS TEST-GRADED A
Name: Solutions Student #:
Quiz instructions:
➢ Answer in the space provided
➢ No text book or notes allowed
➢ Point form is acceptable
➢ Please write clearly and answer the question asked!
➢ Allocate your time wisely
➢ Cheating is not acceptable and will be dealt with severely
Good luck!
Question Maximum Mark
1 16
2 10
3 24
4 5
5 5
6 10
7 5
8 5
9 10
10 10
Total 100
Page 1 of 10
, Question 1) True or False (you may briefly explain if you wish):
1) One benefit of financial conglomerates is potentially more efficient
resource allocation:
i) True / False
2) Empirical studies confirm that the lower reported net income effect of
purchase accounting transactions results in a significantly negative stock price
reaction
i) True / False
3) The book combined assets of a firm using pooling of interests accounting
are always greater than those of firms using purchase accounting
i) True / False
4) Under purchase accounting if none of the excess over the book net worth paid
for the acquired firm can be amortized on a tax deductible basis, cash flows under
purchase accounting will be the same as under pooling accounting.
i) True / False
5) In the United States, only the federal government can initiate antitrust suits.
i) True / False
6) It is illegal for an outsider to trade shares on the basis of
“misappropriated” information
i) True / False
7) Empirical research finds that no mergers would take place if were not for
tax benefits
i) True / False
8) A stock for stock transaction is generally taxable
i) True / False
9) In a taxable acquisitions, the acquiring firm can step up depreciable assets
i) True / False
10) The premiums paid to the shareholders of target firms in taxable transactions are
generally higher for comparable companies than the premiums paid in a non-
taxable transaction.
i) True / False
11) Empirical research has been divided on the issue of positive gains for targets
in takeovers
i) True / False
Page 2 of 10
Name: Solutions Student #:
Quiz instructions:
➢ Answer in the space provided
➢ No text book or notes allowed
➢ Point form is acceptable
➢ Please write clearly and answer the question asked!
➢ Allocate your time wisely
➢ Cheating is not acceptable and will be dealt with severely
Good luck!
Question Maximum Mark
1 16
2 10
3 24
4 5
5 5
6 10
7 5
8 5
9 10
10 10
Total 100
Page 1 of 10
, Question 1) True or False (you may briefly explain if you wish):
1) One benefit of financial conglomerates is potentially more efficient
resource allocation:
i) True / False
2) Empirical studies confirm that the lower reported net income effect of
purchase accounting transactions results in a significantly negative stock price
reaction
i) True / False
3) The book combined assets of a firm using pooling of interests accounting
are always greater than those of firms using purchase accounting
i) True / False
4) Under purchase accounting if none of the excess over the book net worth paid
for the acquired firm can be amortized on a tax deductible basis, cash flows under
purchase accounting will be the same as under pooling accounting.
i) True / False
5) In the United States, only the federal government can initiate antitrust suits.
i) True / False
6) It is illegal for an outsider to trade shares on the basis of
“misappropriated” information
i) True / False
7) Empirical research finds that no mergers would take place if were not for
tax benefits
i) True / False
8) A stock for stock transaction is generally taxable
i) True / False
9) In a taxable acquisitions, the acquiring firm can step up depreciable assets
i) True / False
10) The premiums paid to the shareholders of target firms in taxable transactions are
generally higher for comparable companies than the premiums paid in a non-
taxable transaction.
i) True / False
11) Empirical research has been divided on the issue of positive gains for targets
in takeovers
i) True / False
Page 2 of 10
