Mergers and Acquisitions Quiz

What is the primary reason companies choose mergers or acquisitions?

• To expand rapidly into new markets

• To save on marketing costs

• To avoid taxes

• To reduce staff

Which term describes buying stocks of a company to gain control?

• Hostile takeover

• Raid

• Merger

• Diversification

What is a takeover bid?

• A hostile acquisition of a company's assets

• A public offer to buy a company's stocks at a premium price

• The selling of company assets for profit

• A strategy to avoid competition

A merger of companies aiming to reduce production costs benefits from:

• Asset-stripping

• Goodwill

• Economies of scale

• Stockholder value

Which of the following is a risk of mergers or acquisitions?

• Increased revenue

• Damage to a company's image

• Synergy creation

• Reduced competition

Which term is used when a company's executives buy its own stocks?

• Management buyout (MBO)

• Hostile takeover

• Leveraged buyout (LBO)

• Corporate raiding

A hostile takeover occurs when:

• A company willingly merges with another

• A company buys another's assets

• A company's management resists acquisition

• A company enters a foreign market

Which strategy involves purchasing undervalued large conglomerates for profit?

• Market capitalization

• Management buyout

• Asset-stripping

• Economies of scale

What happens in a leveraged buyout?

• A company merges with another

• Stocks are bought using borrowed funds

• All stocks are acquired by investors

• Company operations expand

The 'make-or-buy' decision is mainly about:

• Whether to produce internally or purchase from another

• Acquiring another company

• Investing in stock markets

• Offering stockholders higher dividends