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Multiple Choice Quiz
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1

The possible benefits of an acquisition include revenue enhancement and cost reductions.
A)True
B)False
2

A tender offer is a public offer by one firm to directly buy the shares of another firm.
A)True
B)False
3

A consolidation is a merger in which an entirely new firm is created and both the acquired and acquiring firm cease to exist.
A)True
B)False
4

A leveraged buyout is a form of going-private transaction.
A)True
B)False
5

In a tax-free acquisition, the acquisition of shares is considered a sale instead of an exchange.
A)True
B)False
6

The main difference between purchase accounting and pooling of interests is the goodwill created when purchase accounting is used.
A)True
B)False
7

Synergy is the incremental net loss associated with the combination of two firms through a merger or acquisition.
A)True
B)False
8

Gains from mergers included possible tax consequences such as the ability to fully utilize tax losses and the use of unused debt capacity.
A)True
B)False
9

If Firm A is acquiring Firm B, then the cost of capital that should be used to value the merger is Firm A's cost of capital.
A)True
B)False
10

Greenmail is a form of targeted stock repurchase.
A)True
B)False







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