IMT SOLVED ASSIGNMENTS AVAILABLE – FIN009 Test-1
ASSIGNMENT
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Question 1:
Which amongst the following structure is most typically like a business decision which doesn’t require the shareholder approval at all?
a. Asset purchase
b. Merger
c. Stock purchase
d. LBOS
Question 2:
As per the Companies Act 2013, which of the following is the regulatory authority for the approval of scheme of merger
a. High Courts
b. Ministry of Finance
c. NCLT
d. SEBI
Question 3:
What is the minimum size of offer in case of voluntary open offer for acquisition of a target company tab
a. 0.025
b. 0.05
c. 01
d. 0.15
Question 4:
If the acquirer is sure about benefits of deal and doesn’t want to share that with target shareholders, he would most likely end up choosing which amongst the following type of payment?
a. Earn outs
b. Cash
c. Stock
d. None of the above
Question 5:
Cement division of X Ltd purchase the cement division of Y Ltd for Rs. 100 Crores. The payment of 100 Crores will be credited to the bank account of Y Ltd and not the shareholders. This is most likely a case of?
a. Asset purchase
b. Stock acquisition
c. Merger
d. Reverse Merger
Question 6:
Tax saving will arise from which of the following:
a. Accumulated losses
b. Debt Financing
c. Debt Reduction
d. A&B only
Question 7:
If the market capitalization of the acquirer and target is Rs 1000 Cr and Rs 800 Cr respectively, calculate their weights for combining the performance measures of merging entities.
a. 000 and 800
b. 10/8 and 8/10
c. 10 and 8
d. 10/18 and 8/18
Question 8:
The_____ increase in HHI index for already highly concentrated industry leads to high probability of Anti-Trust Actions
a. More than 200
b. More than 150
c. More than 100
d. More than 50
Question 9:
If an almost debt free entity acquires a heavily debt funded firm, the major motive behind this transaction could be:
a. Cost Saving
b. Leverage Benefits
c. Tax Saving
d. Increase borrowing power
Question 10:
IndAS 103 recognizes which of the following method of accounting for business combinations under common control:
a. Pooling of Interest method
b. Purchase method
c. Both of the above
d. None of the above
Question 11:
Which of the following can be treated as business for the purpose of IndAS 103 for acquisition accounting
a. Plant & Machinery
b. A Ltd
c. Divested Cement Division
d. Both b & c above
Question 12:
The____ increase in HHI index for already concentrated industry leads to moderate probability of Anti-Trust Actions
a. More than 200
b. More than 150
c. More than 100
d. More than 50
Question 13:
Which of the following is most likely correct in case of Status Quo method of valuation
a. Value of Target Discounted FCFF+ Control Premium – Value of Synergy
b. Value of Target = Discounted FCFF Control Premium Value of Synergy
c. Value of Target Discounted FCFF-Control Premium value of Synergy
d. Value of Target Discounted FCFF + Control Premium + Value of Synergy
Question 14:
Which of the following theory states that mergers are value increasing phenomenon:
a. Market for Corporate Control
b. Monopoly Gains
c. Synergy Theory
d. All of the above
Question 15:
The cost of Equity for a firm given a risk free rate of 7%, Market return 12% and 1.5 times the beta, is closest to:
a. 0.105
b. 0.125
c. 0.145
d. 0.15
Question 16:
As a defensive strategy, a firm issues deep-discount bonds that are redeemable at par in the event of an unfriendly takeover. These bonds are an example of
a. Greenmail
b. A “scorched earth policy
c. Crown jewels
d. A poison put
Question 17:
A proposed acquisition may create synergy by.. 1. Increasing the market power of the combined firm. II. Improving the distribution network of the acquiring firm. III. Providing the combined firm with a strategic advantage. IV. Reducing the utilization of the acquiring firm’s assets
a. I and III only.
b. II and III only.
c. I and IV only
d. 1, I and II only
Question 18:
A dissident group solicits votes in an attempt to replace existing management. This is called a
a. Proxy fight
b. Shareholder derivative action
c. Tender affer
d. Management freeze-out
Question 19:
If acquirer receives the large depreciation tax shield as a result of acquisition, this will lead to:
a. Value creation
b. Value Destruction
c. Value Neutral
d. None of the above
Question 20:
Which of the following model will least likely be used in case of valuing an M&A transaction:
a. Dividend discount model
b. Free cash flow to firm model
c. Transaction based Valuations
d. Sum of parts Approach
Question 21:
Which amongst the following is least likely the method of payment that should be chosen if the deal structure doesn’t want to impart tax liability on the target shareholders:
a. Cash
b. Debt
c. Stock
d. Earn outs
Question 22:
ITC is a conglomerate having presence in diversified businesses. The best valuation method to value the whole group in case of a merger is.
a. Asset based valuation
b. Transaction Analysis
c. Sum of parts Approach
d. Discounted Cash Flow Method
Question 23:
The date on which process of merger starts and the scheme of merger comes into force is called
a. Appointed Date
b. Ex-merger Date
c. Effective Date
d. No specific terminology for this
Question 24:
As per the Companies Act 2013, For the approval of scheme of merger, shareholders and creditors can cast their respective votes through which of the following modes:
a. In person
b. Postal Ballot
c. OE-Voting
d. All of the above
Question 25:
If ROA of acquirer and Target is 12% and 10% respectively and industry median ROA is 9.5% then which of the following ROA should be used for performance evaluation
a. O21.5% & 19.5%
b. 2.5% &05%
c. 12% & 10%
d. None of the above
Question 26:
Sale of a business division to outsiders is known as:
a. Spin-off
b. Spitt-off
c. Divestiture
d. Split-up
Question 27:
If an acquisition is made using cash payment then the acquisition is:
a. taxable
b. viewed as exchanging of shares and is not taxed
c. a tax-free transaction as no capital gains or losses are recognized
d. none of the above
Question 28:
An optimum deal structure considers the objectives of both the buyer and the seller entities. Which of the following is least likely an objective of the parties?
a. Control
b. Tax status
c. Risk
d. None of the above
Question 29:
When the target sharholders gets additional benefits in future subject to additional turnover achieved by combined entity. It is most likely the form of____ payment.
a. Earn outs
b. Stock deal
c. Debt
d. Cash deal
Question 30:
Dabur India Ltd. is an example of
a. Inorganic growth
b. Organic growth
c. Merger
d. Brown field Project