1 of 4 Set 1 UIBS United International Business Schools Class Work Mergers and Acquisitions 1....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1 of 4 Set 1 UIBS United International Business Schools Class Work Mergers and Acquisitions 1. Rudy's, Inc. and Blackstone, Inc. are all-equity firms. Rudy's has 1,500 shares outstanding at al market price of $22 a share. Blackstone has 2,500 shares outstanding at a price of $38 a share. Blackstone is acquiring Rudy's for $36,000 in cash. What is the merger premium per share? 2. Winslow Co. has agreed to be acquired by Ferrier, Inc. for $25,000 worth of Ferrier stock. Ferrier currently has 1,500 shares of stock outstanding at a price of $21 a share. Winslow has 1,000 shares outstanding at a price of $22. The incremental value of the acquisition is $4,000. What is the merger premium per share? 3. Brite Industries has agreed to r with Nu-Day, Inc. for $20,000 worth of Nu-Day stock. Brite has 1,200 shares of stock outstanding at a price of $15 a share. Nu-Day has 2,000 shares outstanding with a market value of $19 a share. The incremental value of the acquisition is $3,500. What is the value of Nu-Day after the merger? 4. Firm A is being acquired by Firm B for $24,000 worth of Firm B stock. The incremental value of the acquisition is $3,500. Firm A has 1,500 shares of stock outstanding at a price of $15 a share. Firm B has 1,200 shares of stock outstanding at a price of $30 a share. What is the value per share of Firm B after the acquisition? 5. Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 1,800 shares outstanding at a price of $15 a share. What is the value of the merged firm? 6. Firm V was worth $450 and Firm A had a market value of $375. Firm V acquired Firm A for $425 because they thought the combination of the new Firm VA was worth $925. B) 8.36% C) 8.72% D) 12.72% a) What is the merger Premium from the merger of Firm V and Firm A? b) What is the net present value from the merger of Firm V and Firm A? 7. What is the expected return on a stock with a beta of 1.09, a market risk premium of 8%, and a risk-free rate of 4%? A) 4.36% Set 2 True or False 1) Negatively correlated assets reduce risk more than positively correlated assets. 2) Investing globally offers better diversification than investing only domestically. Multiple Choice Questions 3) If there is no relationship between the rates of return of two assets over time, these assets are A) positively correlated. B) negatively correlated. C) perfectly negatively correlated. D) uncorrelated. True or False 4) It is important to explore the company's beta before a merger move. 5) A negative beta means that on average a stock moves in the opposite direction of the market. 6) A stock with a beta of 1.3 is less risky than a stock with a beta of 0.42. 7) Adding stocks with higher standard deviations to a portfolio will necessarily increase the portfolio's risk. Multiple Choice Questions 8) Which one of the following types of risk cannot be effectively eliminated through portfolio diversification? A) inflation risk B) labor problems C) materials shortages D) product recalls 9) Systematic risks A) can be eliminated by investing in a variety of economic sectors. B) are forces that affect all investment categories. C) result from random firm-specific events. D) are unique to certain types of investment. 10) A stock's beta value is a measure of A) interest rate risk. B) total risk. C) systematic risk. D) diversifiable risk. 11) The beta of the market is A) -1.0. B) 0.0. C) 1.0. D) undefined. 12) When stock market has bottomed out and is beginning to recover, the best portfolio to own is the one with a beta of A) 0.0. B) +0.5. C) +1.5. D) +2.0. 13) The best stock to own when the stock market is at a peak and is expected to decline in value is one with a beta of A) +1.5. B) +1.0. C) -1.0. D) -0.5. 14) The market rate of return increased by 8% while the rate of return on XYZ stock increased by 4%. The beta of XYZ stock is A) -2.0. B) -0.40. C) 0.50. D) 2.0. True or False 15) In the Capital Asset Pricing Model, beta measures a stock's sensitivity to overall market returns. 16) According to the CAPM, the required rate of a return on a stock can be estimated using only beta and the risk-free rate. Questions 17) You have gathered the following information concerning a particular investment and conditions in the market. Risk Free: 2.5% Market Rate: 11% Beta 1.35 Risk-free rate Market return Beta of investment 2.5% 11.0% 1.35 According to the Capital Asset Pricing Model, the required return for this investment is A) 8.85%. B) 11.48%. C) 13.98%. D) 14.85%. 1 of 4 Set 1 UIBS United International Business Schools Class Work Mergers and Acquisitions 1. Rudy's, Inc. and Blackstone, Inc. are all-equity firms. Rudy's has 1,500 shares outstanding at al market price of $22 a share. Blackstone has 2,500 shares outstanding at a price of $38 a share. Blackstone is acquiring Rudy's for $36,000 in cash. What is the merger premium per share? 2. Winslow Co. has agreed to be acquired by Ferrier, Inc. for $25,000 worth of Ferrier stock. Ferrier currently has 1,500 shares of stock outstanding at a price of $21 a share. Winslow has 1,000 shares outstanding at a price of $22. The incremental value of the acquisition is $4,000. What is the merger premium per share? 3. Brite Industries has agreed to r with Nu-Day, Inc. for $20,000 worth of Nu-Day stock. Brite has 1,200 shares of stock outstanding at a price of $15 a share. Nu-Day has 2,000 shares outstanding with a market value of $19 a share. The incremental value of the acquisition is $3,500. What is the value of Nu-Day after the merger? 4. Firm A is being acquired by Firm B for $24,000 worth of Firm B stock. The incremental value of the acquisition is $3,500. Firm A has 1,500 shares of stock outstanding at a price of $15 a share. Firm B has 1,200 shares of stock outstanding at a price of $30 a share. What is the value per share of Firm B after the acquisition? 5. Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 1,800 shares outstanding at a price of $15 a share. What is the value of the merged firm? 6. Firm V was worth $450 and Firm A had a market value of $375. Firm V acquired Firm A for $425 because they thought the combination of the new Firm VA was worth $925. B) 8.36% C) 8.72% D) 12.72% a) What is the merger Premium from the merger of Firm V and Firm A? b) What is the net present value from the merger of Firm V and Firm A? 7. What is the expected return on a stock with a beta of 1.09, a market risk premium of 8%, and a risk-free rate of 4%? A) 4.36% Set 2 True or False 1) Negatively correlated assets reduce risk more than positively correlated assets. 2) Investing globally offers better diversification than investing only domestically. Multiple Choice Questions 3) If there is no relationship between the rates of return of two assets over time, these assets are A) positively correlated. B) negatively correlated. C) perfectly negatively correlated. D) uncorrelated. True or False 4) It is important to explore the company's beta before a merger move. 5) A negative beta means that on average a stock moves in the opposite direction of the market. 6) A stock with a beta of 1.3 is less risky than a stock with a beta of 0.42. 7) Adding stocks with higher standard deviations to a portfolio will necessarily increase the portfolio's risk. Multiple Choice Questions 8) Which one of the following types of risk cannot be effectively eliminated through portfolio diversification? A) inflation risk B) labor problems C) materials shortages D) product recalls 9) Systematic risks A) can be eliminated by investing in a variety of economic sectors. B) are forces that affect all investment categories. C) result from random firm-specific events. D) are unique to certain types of investment. 10) A stock's beta value is a measure of A) interest rate risk. B) total risk. C) systematic risk. D) diversifiable risk. 11) The beta of the market is A) -1.0. B) 0.0. C) 1.0. D) undefined. 12) When stock market has bottomed out and is beginning to recover, the best portfolio to own is the one with a beta of A) 0.0. B) +0.5. C) +1.5. D) +2.0. 13) The best stock to own when the stock market is at a peak and is expected to decline in value is one with a beta of A) +1.5. B) +1.0. C) -1.0. D) -0.5. 14) The market rate of return increased by 8% while the rate of return on XYZ stock increased by 4%. The beta of XYZ stock is A) -2.0. B) -0.40. C) 0.50. D) 2.0. True or False 15) In the Capital Asset Pricing Model, beta measures a stock's sensitivity to overall market returns. 16) According to the CAPM, the required rate of a return on a stock can be estimated using only beta and the risk-free rate. Questions 17) You have gathered the following information concerning a particular investment and conditions in the market. Risk Free: 2.5% Market Rate: 11% Beta 1.35 Risk-free rate Market return Beta of investment 2.5% 11.0% 1.35 According to the Capital Asset Pricing Model, the required return for this investment is A) 8.85%. B) 11.48%. C) 13.98%. D) 14.85%.
Expert Answer:
Answer rating: 100% (QA)
UIBS Mergers and Acquisitions Set 1 Solutions 1 Rudys Merger Premium Blackstone pays 36000 for 1500 Rudys sharesmeaning each Rudys share receives 36000 1500 shares 24 per share The merger premium is t... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
Students also viewed these corporate finance questions
-
1. Based on the information provided in the case below, what is the key strategic goal for Tim Hortons as of August 2014? It would be a year of dramatic change for Tim Hortons Inc. On August 26,...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The following data were taken from the year- end records of Glare Import Company: Required: Fill in all of the missing amounts. Show computations. Year 2 Statement of Eamings Items Gross sales venue...
-
Graph the functions given below 1. y = (x + 1) (x - 3) (x - 1) 2. y = x3 - 8x2 + 19x - 12 3. y = 1 - 2x / x 4. y = x / x - 1
-
a. In Figure 8-11, how will a router test whether Row 3 matches the IPv4 address 60.168.6.7? Show the calculations in the format given in Figure 8-12. b. Is the row a match? c. Why is the last row...
-
On March 13, 2009, Juan Mendez Sr. was admitted to a nursing facility. On that day, a doctor employed by the facility determined the father lacked the capacity to give informed consent or make...
-
On December 1, 2014, Boline Distributing Company had the following account balances. During December, the company completed the following summary transactions. Dec. 6 Paid $1,600 for salaries due...
-
Calculate the following for a 3 ft 4 ft window with the label to the right. The summer design conditions for peak cooling load are 70 and 60% RH inside; 90 and 90% outside; and a peak direct solar...
-
3. Consider the logistic difference equation, a. we constrain x to the interval [0, 1]. well-defined (i.e. x = [0, 1] for all i > 0). xn+1 = axn (1xn) Determine amin and amax for which the difference...
-
Consider the triangle in the figure below. Construct a neural network based on binary step elements such that the output value is 1 within the triangle and 0 elsewhere. 2 6 5 4 3 2 O 0 1 2 T 3 x1 T 4...
-
Turn off the az/alt coordinates (z), and toggle on the equatorial grid (command keystroke e). You are now looking at the right ascension/declination coordinate system, Record these coordinates for...
-
The diagram shows a 100 kg man in static equilibrium at the top of a push-up. A) What is the force at his feet (Ffeet)? B) How far from his feet is his center of gravity located? +M
-
3. Proof that the energy I of a photon is related to its wavelength by: 1240 eVm I = 3.1. The light from a Orange sodium lamp, such as those used in urban lighting, has a wavelength of 589 nm. How...
-
(a) An exoplanet is in an elliptical orbit around a distant star. At its closest approach, the exoplanet is 0.530 AU from the star and has a speed of 54.0 km/s. When the exoplanet is at its farthest...
-
Calculate the number of salespeople required to cover the market. in the present setup (use Table 2) [4 marks]b. with the proposed new setup (use Table 3) [4marks] Type of Shops Pan Shops Kirana...
-
What are multinational corporations (MNCs) and what economic roles do they play?
-
A: The answers below correspond to parts (a) through (f) in exercise 25.6: (a) If this is the state of things when the patent runs out, will you change your output level? What happens to your profit?...
-
We will now re-consider the problem from exercise 12.5 but will focus on the two-step optimization method that starts with cost minimization. A: Suppose again that you face a production process such...
-
In many situations, we are confronted with the decision of whether to challenge someone who is currently engaged in a particular activity. In personal relationships, for instance, we decide whether...
-
Assume that the economy can experience four possible states: high growth, normal growth, recession, or depression. For each of those states, you expect the following stock market returns for the...
-
Suppose an investment pays off $800 or $1,600 with equal probability per $1,000 invested. What is the maximum leverage ratio you could have and still have enough to repay the loan in the event the...
-
The imposition of new trade tariffs has resulted in tensions between the United States and some of its major trading partners. Suppose you are a small business owner in the United States. a. How...
Study smarter with the SolutionInn App