FIN 461 Exam 1 Miami University Boulton With complete Questions and answers Updated RATED A+

FIN 461 Exam 1 Miami University Boulton With
complete Questions and answers Updated
RATED A+

Why does M&A tend to occur in waves? - Correct Answers (1) Strong correlation between S&P
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performance and the amount of M&A activity.
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(2) Companies can use their stock to make acquisitions when their stock price is high.
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II! 4 Factors that contribute to M&A waves - Correct Answers (1) Liquidity; most recent factor in
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II! M&A wave II!




(2) Disruptive Technology; 1990's
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(3) Regulation/Deregulation; 1980's
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(4) 'Shocks'; oil prices
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II! Motives for why firms engage in M&A transactions - Correct Answers (1) Synergies
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(2) Diversification
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II! Horizontal Integration - Correct Answers driven by economies of scale & scope
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II! Vertical Integration - Correct Answers motive is greater control over production and
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II! distribution



II! Backward Integration (Vertical Integration) - Correct Answers upstream; raw material supplies,
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II! manufacturing/production



II! Forward Integration (Vertical Integration) - Correct Answers downstream; distribution, end user
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, II! Conglomeration - Correct Answers driven by desire to diversify II! II! II! II! II! II! II! II! II! II! II! II!




II! Who wins in an M&A transaction? - Correct Answers the target firm
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II! Who loses in an M&A transaction? - Correct Answers the acquiring firm
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II! What factors DO matter in creating value for the acquirer? - Correct Answers (1) Financing
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II! structure

(2) Target company status
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(3) Earnings growth
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(4) Foreign vs domestic acquisitions
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II! What factors DO NOT matter in creating value for the acquirer? - Correct Answers (1) EPS
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(2) Transaction size
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(3) Profitability & volatility
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(4) Credit rating impact
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(5) Industry
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II! The functions performed by investment banks - Correct Answers (1) M&A advisory
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(2) Underwriting
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(3) Sales & Trading
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(4) Research
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(5) Syndicate
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