21) A ________ a method of structuring a financial merger, : 1417813
21) A ________ is a method of structuring a financial merger, whereas a ________ involves the sale of the firm's assets.
A) leveraged buyout; bankruptcy
B) congeneric buyout; divestiture
C) horizontal merger; leveraged divestiture
D) leveraged buyout; divestiture
22) Leveraged buyouts are clear examples of ________.
A) strategic mergers
B) vertical mergers
C) financial mergers
D) congeneric mergers
23) The creation of a high-debt, private corporation with improved cash flow and value is the goal in ________.
A) a spin-off
B) a divestiture
C) a conglomerate merger
D) a leveraged buyout
24) Which of the following is true of a leveraged buyout?
A) It is a type of a strategic merger.
B) It is used to increase market share, which is used to maximize shareholder wealth.
C) It aims at developing monopoly control over the markets.
D) It involves the use of a large amount of debt to purchase a firm.
25) Leveraged buyouts require a target firm ________.
A) to have low level of investments in fixed assets
B) to possess high leverage in its capital structure
C) to maintain relatively high provision for doubtful accounts
D) to have a high level of bankable assets
26) An attractive candidate for acquisition through a leveraged buyout should ________.
A) possess a relatively high leverage
B) have a solid profit history
C) have a high level of provision for doubtful accounts
D) have a low level of investment in fixed assets
27) A leveraged buyout needs to be carried out through ________.
A) a hostile takeover
B) a friendly merger
C) a vertical merger or a hostile takeover
D) a conglomerate merger
28) The motive for divestiture includes ________.
A) employee stock option
B) additional debt by the parent company
C) cash generation for expansion
D) additional stock to the parent company
29) The selling of some of a firm's assets is called ________.
A) leverage buyout
C) reverse merger
30) A divestiture that results in an operating unit becoming an independent company is a ________.
A) sale of a line of business
B) strategic merger
C) spin-off of an operating unit
D) leveraged buyout
31) A spin-off means ________.
A) a subsidiary being sold to existing management resulting in a new company
B) a subsidiary merging completely with its holding company
C) a subsidiary becoming an independent company
D) a subsidiary being taken over by the federal government due to its incapabilities to survive on its own
32) The result of spin-off to the parent company is ________.
A) additional stock to the parent through stock dividend
B) additional cash from the sale
C) additional debt by the parent through issue of bonds
D) no additional cash to the subsidiary
33) One of the main goals of divestiture is ________.
A) expanding operations
B) economies of scale
C) employee stock option
D) raising funds
34) A form of divestiture in which an operating unit becomes an independent company by issuing shares in it on a pro rata basis to the parent company's shareholders is called ________.
A) leveraged buyout
B) employee stock option
D) strategic takeover