For a buy-side banker advising its client, all of the following changes to contractual items might make its client's offer more appealing to the target EXCEPT

For a buy-side banker advising its client, all of the following changes to contractual items might make its client's offer more appealing to the target...

The buy-side adviser typically uses the financial model to analyze all of the following scenarios for the target's financial performance during due diligence EXCEPT the

The buy-side adviser typically uses the financial model to analyze all of the following scenarios for the target's financial performance during due...

Which group within investment banking typically monitors and keeps a database of precedent transactions for investment grade bond deals in the marketplace?

Which group within investment banking typically monitors and keeps a database of precedent transactions for investment grade bond deals in the marketplace?  A)...

How long does a typical auction process take from the initial decision to sell until signing a contract with the buyer?

How long does a typical auction process take from the initial decision to sell until signing a contract with the buyer?  A) 2 weeks B) 30-60...

Which group within investment banking typically monitors and keeps a database of precedent transactions for convertible bond deals in the marketplace?

Which group within investment banking typically monitors and keeps a database of precedent transactions for convertible bond deals in the marketplace?  A)...

Professionals from which of the following investment banking groups are typically best suited to craft marketing materials for a given company?

Professionals from which of the following investment banking groups are typically best suited to craft marketing materials for a given company?  A)...

In preparing marketing materials for an M&A sale process, it is common practice for all of the following individuals to communicate freely and collaborate on the final product EXCEPT

In preparing marketing materials for an M&A sale process, it is common practice for all of the following individuals to communicate freely and collaborate...

All of the following potential issues are typically investigated during buyer due diligence in the second round EXCEPT

All of the following potential issues are typically investigated during buyer due diligence in the second round EXCEPT  A) detailed growth...

Traditionally, who among the following provides a Fairness Opinion?

Traditionally, who among the following provides a Fairness Opinion?  A) Auditor B) CFO C) Investment bank D) Anchor shareholders Answer:...

In an M&A transaction, how does the use of a meaningful portion of stock versus all cash generally impact the premium paid for the target company?

In an M&A transaction, how does the use of a meaningful portion of stock versus all cash generally impact the premium paid for the target company?  A)...

All of the following due diligence findings might result in the buy-side adviser recommending that its client lower its offer price EXCEPT

All of the following due diligence findings might result in the buy-side adviser recommending that its client lower its offer price EXCEPT  A)...

Which group within investment banking typically monitors and keeps a database of precedent transactions for high yield bond deals in the marketplace?

Which group within investment banking typically monitors and keeps a database of precedent transactions for high yield bond deals in the marketplace?  A)...

Buy-side advisers are typically chosen on the basis of all the following EXCEPT

Buy-side advisers are typically chosen on the basis of all the following EXCEPT  A) Relationship with and insights into the seller B) Cash...

How long does a two-step merger typically take?

How long does a two-step merger typically take?  A) 1 week B) 2 weeks C) 30 days D) 6 weeks or more Answer:...

Which section of the merger proxy details how the deal came to fruition?

Which section of the merger proxy details how the deal came to fruition?  A) Background of the Merger B) Fairness Opinion C) Risk Factors D)...

Which two of the following situations increase the chances for an SEC review of the merger proxy? I. Management Buyout (MBO) II. High purchase multiple III. Takes place in fourth quarter of calendar year IV. Buyer issues shares as part of the transaction

Which two of the following situations increase the chances for an SEC review of the merger proxy?I. Management Buyout (MBO)II. High purchase multipleIII....

Buyers typically expect to meet all of the following company officers at the management presentation EXCEPT

Buyers typically expect to meet all of the following company officers at the management presentation EXCEPT  A) key business division head(s) B)...

Which of the following typically has the highest breakage costs upon a change-of-control in a contemplated sale transaction?

Which of the following typically has the highest breakage costs upon a change-of-control in a contemplated sale transaction?  A) High yield...

Which of the following play a lead role in crafting the Background of the Merger section in the merger proxy? I. Public relations firm II. Financial advisers III.Legal counsel IV. Head of investor relations

Which of the following play a lead role in crafting the Background of the Merger section in the merger proxy?I. Public relations firmII. Financial advisersIII.Legal...

When an investment bank renders a fairness opinion for a given public target company in response to a offer from a potential acquirer, the company's Board of Directors

When an investment bank renders a fairness opinion for a given public target company in response to a offer from a potential acquirer, the company's...

Who typically provides the stapled financing in a sale process?

Who typically provides the stapled financing in a sale process?  A) The investment bank running the sale process B) The target company being...

Which two investment banking groups communicate continuously and work hand-in-hand with the syndicate desk to keep apprised of market conditions and deals in the marketplace? I. M&A II. Leveraged finance III. Industry groups IV. Equity capital markets

Which two investment banking groups communicate continuously and work hand-in-hand with the syndicate desk to keep apprised of market conditions and...

Which of the following documents is most important for buyers to craft first round bids for a given target?

Which of the following documents is most important for buyers to craft first round bids for a given target?  A) CIM B) Definitive agreement C)...

Which two of the following engagement letter provisions are often the most highly negotiated? I. Term length II. Target company definition III. Acquirer company definition IV. Fee amount

Which two of the following engagement letter provisions are often the most highly negotiated?I. Term lengthII. Target company definitionIII. Acquirer...

Which two of the following are examples of outs as they might appear in a mark-up of a sale contract (definitive agreement)? I. Indemnity capped at $100 million II. Need for additional due diligence III. Go-shop provision IV. Firming up of financing commitments

Which two of the following are examples of outs as they might appear in a mark-up of a sale contract (definitive agreement)?I. Indemnity capped at $100...

In which two of the following scenarios might a buyer decide not to hire a buy-side adviser? I. The target is too small II. The target is being sold in competitive auction III. The target is public IV. The buyer is extremely familiar with the target and has had prior discussions on price

In which two of the following scenarios might a buyer decide not to hire a buy-side adviser?I. The target is too smallII. The target is being sold in...

What does a "one-step" merger refer to?

What does a "one-step" merger refer to? A) Merger that is consummated in accordance with SEC filing Form S-1 B) M&A transaction whereby the...

Which two of the following are key marketing points for a public company buyer in announcing an M&A deal to the market? I. Higher leverage for combined entity II. Cultural fit III. Lack of M&A track record IV. Synergies

Which two of the following are key marketing points for a public company buyer in announcing an M&A deal to the market?I. Higher leverage for combined...

Buy-side advisers are granted access to the data room for all of the following reasons EXCEPT

Buy-side advisers are granted access to the data room for all of the following reasons EXCEPT  A) it enables them to receive and download...

Synergies directly affect the calculations for which two of the following buy-side financial analyses used to determine valuation for a given target? I. Accretion/(dilution) II. Premiums paid III. LBO Analysis IV. DCF

Synergies directly affect the calculations for which two of the following buy-side financial analyses used to determine valuation for a given target?I....

Why do buyers hire an investment bank? I. To determine optimal bid strategy II. To run key process points III.To participate in contract negotiations with target IV. To perform detailed valuation analysis on the target

Why do buyers hire an investment bank?I. To determine optimal bid strategyII. To run key process pointsIII.To participate in contract negotiations with...

How many bidders are typically accepted into the second round of an auction process?

How many bidders are typically accepted into the second round of an auction process?  A) 1-2 B) 3-5 C) 5-10 D) more than 10 Answer:...

A buy-side adviser would need to analyze which of the following items during due diligence to determine change-of-control provisions on the target's debt?

A buy-side adviser would need to analyze which of the following items during due diligence to determine change-of-control provisions on the target's...

An effective buy-side adviser may argue for all of the following non-financial items to make its client's offer more appealing to the target EXCEPT

An effective buy-side adviser may argue for all of the following non-financial items to make its client's offer more appealing to the target EXCEPT  A)...

Who typically makes a recommendation to the client regarding selection of a virtual dataroom vendor?

Who typically makes a recommendation to the client regarding selection of a virtual dataroom vendor?  A) Sell-side adviser B) Auditor C) Bidder D)...

An effective buy-side adviser may use all of the following non-financial items to make its client's offer more appealing to the target EXCEPT

An effective buy-side adviser may use all of the following non-financial items to make its client's offer more appealing to the target EXCEPT  A)...

Which of the following participants in an M&A transactions typically play the key role in crafting the target company's financial projections for a sell-side process? I. Company CFO II. Legal counsel III. Outside PR firm IV. Sell-side bankers

Which of the following participants in an M&A transactions typically play the key role in crafting the target company's financial projections for...

The buy-side adviser's financial model typically contains all of the following EXCEPT

The buy-side adviser's financial model typically contains all of the following EXCEPT  A) DCF analysis B) Accretion/dilution C) Target standalone...

All of the following are common M&A strategies used by buyers in assessing targets EXCEPT

All of the following are common M&A strategies used by buyers in assessing targets EXCEPT  A) Vertical integration B) Consolidation C)...

How often do investment banking industry bankers, M&A bankers and capital markets professionals typically communicate internally on various client matters?

How often do investment banking industry bankers, M&A bankers and capital markets professionals typically communicate internally on various client...

Which of the following are typical buyer concerns regarding drivers of the target's future performance that an effective sell-side adviser needs to anticipate and prepare responses to during due diligence? I. Cash management strategy II. Cyclical trends III. Potential regulatory changes IV. Existing lenders

Which of the following are typical buyer concerns regarding drivers of the target's future performance that an effective sell-side adviser needs to...

At what point in an M&A sale process is an online vendor for the data room typically chosen?

At what point in an M&A sale process is an online vendor for the data room typically chosen?  A) Directly following the management presentation B)...

All of the following are key frames of reference for formulating first round bids EXCEPT

All of the following are key frames of reference for formulating first round bids EXCEPT  A) Break-up fees B) Precedent transactions multiples C)...

What is the typical investment time horizon for strategic investors?

What is the typical investment time horizon for strategic investors?  A) 1 year B) 3-5 years C) 8-10 years D) Indefinite Answer:...

In the event the sell-side adviser is providing a staple financing, at what point does the staple financing team typically begin conducting due diligence on the target?

In the event the sell-side adviser is providing a staple financing, at what point does the staple financing team typically begin conducting due diligence...

Investment bankers communicate internally with colleagues from the leveraged finance group on which of the following topics?

Investment bankers communicate internally with colleagues from the leveraged finance group on which of the following topics?  A) Investment grade...

How many potential buyers are typically contacted in a targeted auction?

How many potential buyers are typically contacted in a targeted auction?  A) Between 1 and 5 B) Between 5 and 15 C) At least 15 D) At least...

A public company wishes to communicate with an analyst who claims to have uncovered negative information about its products. The company also wishes to give the analyst comments that will help him correct his forecast. Which of the following activities does Regulation FD allow? I. Comments to the analyst on the forecast, provided no new material information is disclosed II. Disclosure of material information to the analyst, provided it is accurate and used to correct an apparent error III. Disclosure of material information to the analyst, with an "express agreement" to keep the information confidential.

A public company wishes to communicate with an analyst who claims to have uncovered negative information about its products. The company also wishes...

At which stage of an M&A sale process are bidders first granted access to target management?

At which stage of an M&A sale process are bidders first granted access to target management?  A) Telephonically, after distribution of the...

Following SEC approval of the merger proxy disclosure, how long does it typically take until the shareholder vote?

Following SEC approval of the merger proxy disclosure, how long does it typically take until the shareholder vote?  A) 1 week B) 2 weeks C)...

Why might a seller prefer an asset sale to a stock sale?

Why might a seller prefer an asset sale to a stock sale?  A) Higher valuation B) Shorter process timeline C) Less legal documentation D) Cannot...

Which two of the following opportunities are typically layered in to the standalone valuation analysis performed on the target by buy-side advisers? I. Break-up fee II. Bolt-on acquisitions III. Synergies IV. Reps and Warranties

Which two of the following opportunities are typically layered in to the standalone valuation analysis performed on the target by buy-side advisers?I....

In an M&A sales, which of the following are typical buyer concerns that an effective sell-side adviser needs to anticipate and prepare responses for during due diligence? I. Interest income on cash on balance sheet II. Company's future growth drivers III.Sustainability of margins IV. Investor relations position

In an M&A sales, which of the following are typical buyer concerns that an effective sell-side adviser needs to anticipate and prepare responses...

Which two of the following traditionally help buyers identify potential M&A targets? I. Consulting firms II. First Call III.Investment bankers IV. Auditors

Which two of the following traditionally help buyers identify potential M&A targets?I. Consulting firmsII. First CallIII.Investment bankersIV. Auditors  A)...

A buyer's final bid package is expected to include all of the following EXCEPT

A buyer's final bid package is expected to include all of the following EXCEPT  A) A markup of the draft definitive agreement provided by the...

Which two of the following typically take the lead in crafting the first draft of the press release announcing a given transaction for a public company? I. Research analyst with longstanding coverage of the company II. Head of investor relations III. Legal counsel IV. Public relations firm

Which two of the following typically take the lead in crafting the first draft of the press release announcing a given transaction for a public company?I....

All of the following are reasons why acquirers spend a great deal of time crafting the optimal financing mix for a given purchase price for an M&A target EXCEPT

All of the following are reasons why acquirers spend a great deal of time crafting the optimal financing mix for a given purchase price for an M&A...

The buy-side adviser uses all of the following tactics to inform its client's negotiating strategy in an auction process EXCEPT

The buy-side adviser uses all of the following tactics to inform its client's negotiating strategy in an auction process EXCEPT  A) direct...

Why do public strategic bidders typically perform LBO Analysis as part of their valuation work?

Why do public strategic bidders typically perform LBO Analysis as part of their valuation work?  A) To Comply with an SEC requirement enacted...

As a closing condition, to what extent must a given party's reps and warranties typically be accurate?

As a closing condition, to what extent must a given party's reps and warranties typically be accurate?  A) 100% true and accurate B) True in...

Target company shareholder approval for an M&A transaction typically requires approval from greater than

Target company shareholder approval for an M&A transaction typically requires approval from greater than  A) 60% of shareholders B) 50%...

How many potential buyers are typically contacted in a broad auction?

How many potential buyers are typically contacted in a broad auction?  A) Fewer than 5 B) Between 5 and 25 C) More than 25 D) None, in a broad...

How is the sharing of sensitive due diligence information with direct competitor bidders typically handled?

How is the sharing of sensitive due diligence information with direct competitor bidders typically handled?  A) It is not shared until after...

All of the following resources outside of the target company and its sale process would likely provide the buy-side adviser with valuable insights and an edge on due diligence EXCEPT

All of the following resources outside of the target company and its sale process would likely provide the buy-side adviser with valuable insights and...

All of the following due diligence findings might result in the buy-side adviser recommending that its client raise its offer price EXCEPT

All of the following due diligence findings might result in the buy-side adviser recommending that its client raise its offer price EXCEPT  A)...

Which two of the following does the buy-side adviser typically attend together with its client? I. Definitive Agreement drafting sessions II. HSR approval session III. Buyer board meeting at which the given acquisition is assessed IV. Target auditor's offices

Which two of the following does the buy-side adviser typically attend together with its client?I. Definitive Agreement drafting sessionsII. HSR approval...

Professionals from which of the following investment banking groups are typically best suited to develop optimal financing solutions for a given company?

Professionals from which of the following investment banking groups are typically best suited to develop optimal financing solutions for a given company?  A)...

Which of the following participants plays the central role in handling follow-up due diligence requests from buyers as they pore through the data room?

Which of the following participants plays the central role in handling follow-up due diligence requests from buyers as they pore through the data room?  A)...

In an M&A deal purchasing synergies refer to

In an M&A deal purchasing synergies refer to  A) premiums paid justified by expected synergies B) the ability to buy inputs more cheaply...

Investment bankers work internally with colleagues from which group to get pricing and terms for a new bond issuance?

Investment bankers work internally with colleagues from which group to get pricing and terms for a new bond issuance?  A) Debt capital markets B)...

All of the following is non-financial deal data that is often tracked by M&A advisers in precedent transactions except?

All of the following is non-financial deal data that is often tracked by M&A advisers in precedent transactions except?  A) Break-up fee B)...

The sell-side adviser's key responsibilities for coordinating second round due diligence include all of the following EXCEPT

The sell-side adviser's key responsibilities for coordinating second round due diligence include all of the following EXCEPT  A) ensuring...

For a buy-side banker advising its client, which of the following changes to contractual items might make its client's offer MORE appealing to the target?

For a buy-side banker advising its client, which of the following changes to contractual items might make its client's offer MORE appealing to the target?  A)...

All of the following are typically members of the buyer's internal due diligence team for a sizeable acquisition EXCEPT

All of the following are typically members of the buyer's internal due diligence team for a sizeable acquisition EXCEPT  A) CFO B) Key division...

Which of the following are lawyers most sensitive about when reviewing key M&A marketing documents, such as the teaser, CIM and management presentation?

Which of the following are lawyers most sensitive about when reviewing key M&A marketing documents, such as the teaser, CIM and management presentation?  A)...

Which two of the following does the buy-side adviser typically attend together with its client? I. HSR application session II. Site visits III. Target company Board meeting IV. Management presentations

Which two of the following does the buy-side adviser typically attend together with its client?I. HSR application sessionII. Site visitsIII. Target...

How much time are buyers typically afforded to submit a first round bid once they receive the teaser?

How much time are buyers typically afforded to submit a first round bid once they receive the teaser?  A) A few days B) 1 week C) Several weeks D)...

At which point in the M&A process does the sell-side adviser begin conducting due diligence on potential buyers?

At which point in the M&A process does the sell-side adviser begin conducting due diligence on potential buyers?  A) Prior to process launch B)...

All of the following are fair statements regarding the material adverse changes (MAC) provision in a definitive agreement EXCEPT

All of the following are fair statements regarding the material adverse changes (MAC) provision in a definitive agreement EXCEPT  A) It is...

All of the following are ways in which indemnification rights are typically limited EXCEPT

All of the following are ways in which indemnification rights are typically limited EXCEPT  A) Time during which a claim can be made B)...

Which of the following buy-side due diligence discovery items might lead to a buyer deducting from its first round bid price?

Which of the following buy-side due diligence discovery items might lead to a buyer deducting from its first round bid price?  A) Additional...

Which of the following is a legally binding contract between the target and each prospective buyer that governs the sharing of non-public company information?

Which of the following is a legally binding contract between the target and each prospective buyer that governs the sharing of non-public company information? A)...

Within the context of M&A processes, what does a negotiated sale refer to?

Within the context of M&A processes, what does a negotiated sale refer to? A) A long-term, highly negotiated sale from a key vendor B) A large...

The typical CIM contains all of the following EXCEPT

The typical CIM contains all of the following EXCEPT A) Target financial projections and MD&A B) Information on target's industry and competitive...

Under what circumstances can a buyer withdraw from a sale process after it has submitted a first round bid?

Under what circumstances can a buyer withdraw from a sale process after it has submitted a first round bid? A) At any time with no approvals necessary B)...

All of the following are typically included in the M&A teaser for a private company EXCEPT

All of the following are typically included in the M&A teaser for a private company EXCEPT A) Brief description of the business B) Summary...

In which case would a buyer perform accretion/dilution analysis as part of its process for formulating a first round bid?

In which case would a buyer perform accretion/dilution analysis as part of its process for formulating a first round bid? A) Buyer is a financial...

How many rounds does a typical auction process consist of?

How many rounds does a typical auction process consist of? A) 1 B) 2 C) 3 D) 5 or more Answer:...

Approximately how long are prospective buyers given to craft first round bids?

Approximately how long are prospective buyers given to craft first round bids? A) One week B) Two weeks C) One month D) Two months or more Answer:...

Why do sellers hire an investment bank? I. Design and execute key process points II. Alleviate burden from company management III. Legal comfort for the board IV. Maximize value received

Why do sellers hire an investment bank?I. Design and execute key process pointsII. Alleviate burden from company managementIII. Legal comfort for the...

Which two of the following are often heavily negotiated in a confidentiality agreement between two corporations? I. Initial bid date II. Length of term III. Indicative purchase price IV. Non-solicitation

Which two of the following are often heavily negotiated in a confidentiality agreement between two corporations?I. Initial bid dateII. Length of termIII....

Which of the following are key components of the second round of a traditional auction? I. Site visits II. Distribution and mark up of the definitive agreement III. Management presentation IV. Data room analysis and review

Which of the following are key components of the second round of a traditional auction?I. Site visitsII. Distribution and mark up of the definitive...

How many bidders are typically invited to the second round of a formal sale process?

How many bidders are typically invited to the second round of a formal sale process? A) 1-2 B) 5-10 C) >10 D) >20 Answer:...

Which two of the following do buyers typically plan on bringing with them to the management presentation for a given target? I. Outside legal counsel II. Operating Partners III. Investment bankers IV. Auditors

Which two of the following do buyers typically plan on bringing with them to the management presentation for a given target?I. Outside legal counselII....

At what stage in the M&A process do buyers start to line up financing sources?

At what stage in the M&A process do buyers start to line up financing sources? A) In conjunction with formulating first round bids B) After...

All of the following are typically provided access to the data room EXCEPT

All of the following are typically provided access to the data room EXCEPT A) Buyer functional specialist B) Buy side advisors C) Acquisition financing...

How many potential buyers are typically contacted in a broad auction?

How many potential buyers are typically contacted in a broad auction? A) <5 p="">B) 5-15 C) >25 D) >500 Answer:...

Investment banks help client companies assess all of the following strategic alternatives when evaluating a potential sale EXCEPT

Investment banks help client companies assess all of the following strategic alternatives when evaluating a potential sale EXCEPT A) Dividend Recapitalization B)...

For the sale of a sizeable business, who typically runs the sell-side process?

For the sale of a sizeable business, who typically runs the sell-side process? A) Company CEO B) Company CFO C) Investment Bank D) Anchor Shareholders Answer:...

How many pages is a typical M&A Confidential Information Memorandum?

How many pages is a typical M&A Confidential Information Memorandum? A) 1-5 B) 10+ C) 25-50 D) 50+ Answer:...

Which of the following is NOT a marketing document in an M & A process?

Which of the following is NOT a marketing document in an M & A process? A) Teaser B) Confidential Information Memorandum C) Management Presentation D)...

In valuing privately held companies using discounted cash flow (DCF) analysis, valuations are often given haircuts for

In valuing privately held companies using discounted cash flow (DCF) analysis, valuations are often given haircuts for  A) competitive market...

Changing depreciation methods from double declining to straight-line would be classified as a(n)

Changing depreciation methods from double declining to straight-line would be classified as a(n)  A) extraordinary item B) business disruption C)...

Which of the following provides a gauge of a company's efficiency in managing the collection of its accounts receivable?

Which of the following provides a gauge of a company's efficiency in managing the collection of its accounts receivable?  A) Days sales outstanding B)...

ABC Corporation has experienced a decline in working capital over the past year. Its current liabilities are the same as a year ago. Which of the following must be true?

ABC Corporation has experienced a decline in working capital over the past year. Its current liabilities are the same as a year ago. Which of the following...

Goodwill refers to which of the following?

Goodwill refers to which of the following?  A) The excess amount paid for a target over its existing book value B) The excess amount paid...

Inventory turns is calculated as

Inventory turns is calculated as  A) debt/average inventory B) cash/average inventory C) COGS/average inventory D) net income/average inventory Answer:...

A $50 million increase in capital expenditures during 2010 would result in a

A $50 million increase in capital expenditures during 2010 would result in a  A) $50 million increase in net income B) $50 million increase...

Which of the following is a broadly accepted standard for use as the discount rate to calculate the present value of a company's projected free cash flow?

Which of the following is a broadly accepted standard for use as the discount rate to calculate the present value of a company's projected free cash...

Which of the following is used to measure the pro forma effects of an M&A transaction on earnings?

Which of the following is used to measure the pro forma effects of an M&A transaction on earnings?  A) comparable companies analysis B)...

A company's hurdle rate on proposed investments is 8.5%. The company is evaluating a proposed investment costing $35 million that will produce a series of projected annual cash flows over a period of 10 years, so that the 10-year internal rate of return (IRR) is 7.7%. How could the company increase the IRR so that the hurdle rate is met?

A company's hurdle rate on proposed investments is 8.5%. The company is evaluating a proposed investment costing $35 million that will produce a series...

Which of the following is not a section of the cash flow statement?

Which of the following is not a section of the cash flow statement?  A) Retained earnings B) Investing activities C) Operating activities D)...

When performing a discounted cash flow analysis, a banker uses which of the following to capture the value of a company beyond the projection period?

When performing a discounted cash flow analysis, a banker uses which of the following to capture the value of a company beyond the projection period?  A)...

Which of the following would be captured under the investing activities section of a company's cash flow statement?

Which of the following would be captured under the investing activities section of a company's cash flow statement?  A) An increase in accounts...

A company has an inventory turnover ratio of 1.5. If the company pays 5% more each year to acquire inventory, what will be the impact on this ratio over time resulting from a shift from LIFO to FIFO inventory accounting?

A company has an inventory turnover ratio of 1.5. If the company pays 5% more each year to acquire inventory, what will be the impact on this ratio...

The market risk premium refers to which of the following?

The market risk premium refers to which of the following?  A) The spread of the expected market return over the risk-free rate B) The expected...

The notion that a dollar today is worth more than a dollar tomorrow, is a concept known as the

The notion that a dollar today is worth more than a dollar tomorrow, is a concept known as the  A) discount factor B) time value of money C)...

Capital expenditures refer to which of the following?

Capital expenditures refer to which of the following?  A) Funds that a company uses to purchase, improve, expand, or replace physical assets B)...

A decrease in a company's current assets equates to

A decrease in a company's current assets equates to  A) a decrease in cash B) an increase in cash C) no change in cash D) an increase in assets Answer:...

Company A has a very young workforce. Company B has a relatively old workforce. Both companies have pension plan funding ratios of .85. If interest rates decline, which company's funding ratio is more vulnerable?

Company A has a very young workforce. Company B has a relatively old workforce. Both companies have pension plan funding ratios of .85. If interest...

A stock has an expected return of 5.5% and a Beta of .80. By how much will the excess return of the stock change if the excess return of the S&P 500 falls by 1%?

A stock has an expected return of 5.5% and a Beta of .80. By how much will the excess return of the stock change if the excess return of the S&P...

Which of the following are inputs in calculating a company's quick ratio? I. Accounts receivable II. Cash flow III. Gross sales IV. Current liabilities

Which of the following are inputs in calculating a company's quick ratio?I. Accounts receivableII. Cash flowIII. Gross salesIV. Current liabilities  A)...

A small company has a cost of equity of 12.5%. The risk-free rate is 4.2%, the market risk premium is 5.0%, and the company's stock has a beta of 1.2. Has any small company "size premium" been assigned?

A small company has a cost of equity of 12.5%. The risk-free rate is 4.2%, the market risk premium is 5.0%, and the company's stock has a beta of 1.2....

Depreciation refers to which of the following?

Depreciation refers to which of the following?  A) Funds that a company uses to purchase, improve, expand, or replace physical assets B) An...

The lower a company's DSO, the faster it

The lower a company's DSO, the faster it A) accrues wage expenses B) pays cash for prepaid expenses C) receives cash from credit sales D) pays...

In which of the following instances would it be advisable to use a "sum of the parts" analysis?

In which of the following instances would it be advisable to use a "sum of the parts" analysis?  A) When valuing a company as a standalone...

The current ratio is a measure of

The current ratio is a measure of  A) leverage B) liquidity C) capitalization D) interest coverage Answer:...

In a discounted cash flow analysis, the present value calculation is performed by multiplying the free cash flow for each year in the projection period and the terminal value by its respective

In a discounted cash flow analysis, the present value calculation is performed by multiplying the free cash flow for each year in the projection period...

In times of rising inflation in inventory costs, which of the following methods of valuing inventory will result in the largest reported gross profit?

In times of rising inflation in inventory costs, which of the following methods of valuing inventory will result in the largest reported gross profit?  A)...

Prepaid expenses are considered a current asset for which of the following reasons?

Prepaid expenses are considered a current asset for which of the following reasons?  A) It represents cash paid for a service that provide a...

The valuation implied for a company by a discounted cash flow analysis is also known as its

The valuation implied for a company by a discounted cash flow analysis is also known as its  A) market value B) intrinsic value C) book value D)...

The expected rate of return obtained by investing in a security with very little chance of default is also known as the

The expected rate of return obtained by investing in a security with very little chance of default is also known as the  A) market risk premium B)...

Net working capital is represented by which of the following?

Net working capital is represented by which of the following?  A) Current assets plus current liabilities B) Current assets divided by current...

The assumption in a discounted cash flow analysis that free cash flow is usually received throughout the year rather than at year-end is know as

The assumption in a discounted cash flow analysis that free cash flow is usually received throughout the year rather than at year-end is know as  A)...

$100 million of free cash flow to be received at the end of the first year of a company's projection period the given a WACC of 10% would be worth what amount today?

$100 million of free cash flow to be received at the end of the first year of a company's projection period the given a WACC of 10% would be worth what...

Company D has a cost of equity capital of 14.0% and recently issued 8.0% debt, which currently trades at 104. Assuming the company has 40% equity in its capital structure and has a 40% marginal tax rate, what is its Weighted Average Cost of Capital (WACC)?

Company D has a cost of equity capital of 14.0% and recently issued 8.0% debt, which currently trades at 104. Assuming the company has 40% equity in...

Current the risk-free rate is 3.5% and the expected return of the S&P 500 is 11%. For a company whose stock has a beta of 1.7 what would be its cost of equity capital, calculated in accordance with CAPM?

Current the risk-free rate is 3.5% and the expected return of the S&P 500 is 11%. For a company whose stock has a beta of 1.7 what would be its...

Which of the following financial metrics is the best proxy for unlevered free cash flow?

Which of the following financial metrics is the best proxy for unlevered free cash flow? A) EBITDA B) EBITDA minus Capex C) Net Income plus D&A D)...

Which of the following items does not constitute a current asset?

Which of the following items does not constitute a current asset? A) Inventory B) Accounts payable C) Prepaid expenses D) Accounts receivable Answer:...

Which of the following are the most commonly used ratios for measuring the velocity of a company's fluctuation in products held for sale? I. Inventory Turns II. Inventory as a percentage of sales III. Inventory Obsolescence IV. Days Inventory

Which of the following are the most commonly used ratios for measuring the velocity of a company's fluctuation in products held for sale?I. Inventory...

Which of the following measures the number of days it takes for a company to remit funds on its outstanding moneys owed for goods and services?

Which of the following measures the number of days it takes for a company to remit funds on its outstanding moneys owed for goods and services? A)...

Net working capital refers to which of the following?

Net working capital refers to which of the following? A) Funds that a company uses to purchase, improve, expand or replace physical assets B)...

Given the information below, calculate free cash flow. EBITDA $250M D&A 50M Tax Rate 40% Capex 45M Increase in Net Working Capital $10M

Given the information below, calculate free cash flow.EBITDA $250MD&A 50MTax Rate 40%Capex 45MIncrease in Net Working Capital $10M A) $250M B)...

A company has a gross profit margin of 40%. Given the information below, calculate operating income Sales $1,000M COGS ? Gross Profit ? Selling, G&A $230M Restructuring $10M Operating Income ?

A company has a gross profit margin of 40%. Given the information below, calculate operating incomeSales $1,000MCOGS ?Gross Profit ?Selling, G&A...

A company has sales of $1.0 billion and accounts receivable of $150 million in a given year, what would its DSO be?

A company has sales of $1.0 billion and accounts receivable of $150 million in a given year, what would its DSO be? A) 54.00 B) 54.75 C) 15.00 D)...

A company had sales of $500 million, operating expenses of $50 million, and EBITDA of $25 million during the past year. At the same time, accounts receivable increased by $50 million. How much actual cash did the company receive during the year from its sales?

A company had sales of $500 million, operating expenses of $50 million, and EBITDA of $25 million during the past year. At the same time, accounts receivable...

Which of the following would NOT be considered a current liability?

Which of the following would NOT be considered a current liability? A) Accrued compensation B) Property, plant & equipment C) Accounts Payable D)...

The cash flow statement includes which of the following sections? I. Operating activities II. Shareholders' equity III. Investing activities IV. Retained Earnings

The cash flow statement includes which of the following sections?I. Operating activitiesII. Shareholders' equityIII. Investing activitiesIV. Retained...

An increase in accounts receivable would result in which of the following?

An increase in accounts receivable would result in which of the following? A) A source of cash B) A use of cash C) A decrease in current liability D)...

Where in a company's financial statements is depreciation and amortization typically located?

Where in a company's financial statements is depreciation and amortization typically located? A) Balance Sheet B) Cash Flow Statement C) Debt Schedule D)...

Which of the following is used to help buyers screen for attractive M&A targets by sector?

Which of the following is used to help buyers screen for attractive M&A targets by sector?  A) SIC code B) IBES C) First Call D) Schedule...

What does the control premium refer to in an M&A transaction?

What does the control premium refer to in an M&A transaction?  A) The right for the acquirer to control decisions regarding the target's...

What are potential concerns over using Precedent Transactions to value a company? I. Existence of sufficient number of comparable transactions II. Lack of market basis III. Time period when comparable transactions took place IV. Reliance on use of IBES consensus estimates

What are potential concerns over using Precedent Transactions to value a company?I. Existence of sufficient number of comparable transactionsII. Lack...

Which of the following valuation methodologies is premised on multiples paid for comparable companies in prior business combinations?

Which of the following valuation methodologies is premised on multiples paid for comparable companies in prior business combinations?  A)...

For which reasons might target shareholders prefer cash to stock as purchase consideration in an M&A transaction? I. Maximum liquidity II. Ability to retain upside III. Synergies IV. Certainty of value

For which reasons might target shareholders prefer cash to stock as purchase consideration in an M&A transaction?I. Maximum liquidityII. Ability...

Which of the following are useful when screening for precedent transactions for a given company? I. Merger proxies for comparable companies II. Target's M&A history III.SDC Platinum IV. Research report

Which of the following are useful when screening for precedent transactions for a given company?I. Merger proxies for comparable companiesII. Target's...

Which two of the following are helpful resources for creating a universe of precedent transactions for a given company? I. SDC Platinum II. Company 10-Q III. Fairness opinions for comparable companies IV. Most recent company research report

Which two of the following are helpful resources for creating a universe of precedent transactions for a given company?I. SDC PlatinumII. Company 10-QIII....

All of the following help explain why Precedent Transactions are calculated on the basis of the target's LTM earnings versus earnings estimates EXCEPT:

All of the following help explain why Precedent Transactions are calculated on the basis of the target's LTM earnings versus earnings estimates EXCEPT:  A)...

What is a fixed exchange ratio in an M&A transaction?

What is a fixed exchange ratio in an M&A transaction?  A) The ratio of cash used as part of purchase consideration B) The fixed ratio of...

Who assumes share price movement risks in a fixed exchange ratio, assuming no structural protections?

Who assumes share price movement risks in a fixed exchange ratio, assuming no structural protections?  A) The target company B) The acquiring...

All of the following items are important for tracking precedent transactions for capital restructurings in the marketplace EXCEPT

All of the following items are important for tracking precedent transactions for capital restructurings in the marketplace EXCEPT  A) new...

Use the information in Exhibit 35 to answer the following question. What is the most likely explanation for KLM Manufacturing's stock price being excluded from this analysis?

Use the information in Exhibit 35 to answer the following question. What is the most likely explanation for KLM Manufacturing's stock price being excluded...

In an M&A transaction, on what basis is the premium paid to target shareholders typically calculated?

In an M&A transaction, on what basis is the premium paid to target shareholders typically calculated?  A) The target's share price on...

Which type of offer do private equity firms typically make for private companies?

Which type of offer do private equity firms typically make for private companies?  A) All stock B) All Cash C) Cash/stock mix D) Merger of equals Answer:...

Historically, what is the typical range for premiums paid in all-cash M&A transactions?

Historically, what is the typical range for premiums paid in all-cash M&A transactions?  A) 0-10% B) 10-25% C) 25-35% D) >50% Answer:...

In an M&A transaction, which of the following best explains why the premium paid is typically calculated on the basis of the target share price at multiple intervals prior to announcement?

In an M&A transaction, which of the following best explains why the premium paid is typically calculated on the basis of the target share price...

All of the following precedent transaction items for public companies are available in SEC filings EXCEPT

All of the following precedent transaction items for public companies are available in SEC filings EXCEPT  A) Share repurchase programs B)...

Which criteria are relevant for determining whether a given precedent transaction is relevant for valuing the target company in an M&A scenario: I. Target company sector II. Period during which the transaction took place III. Size of target company IV. Target company domicile

Which criteria are relevant for determining whether a given precedent transaction is relevant for valuing the target company in an M&A scenario:I....

Which of the following structures defines the number of shares of the acquirer's stock to be exchanged for each share of the target's stock?

Which of the following structures defines the number of shares of the acquirer's stock to be exchanged for each share of the target's stock?  A)...

For which reasons might target shareholders prefer stock to cash as purchase consideration in an M&A transaction? I. Tax planning II. Fixed value III. Ability to retain upside IV. Highest premium paid

For which reasons might target shareholders prefer stock to cash as purchase consideration in an M&A transaction?I. Tax planningII. Fixed valueIII....

Which of the following are reasons that Precedent Transactions multiples typically higher than those for Comparable Companies? I. Scarcity of meaningful precedent transactions II. Synergies III. Control premium IV. Quick M&A process timing

Which of the following are reasons that Precedent Transactions multiples typically higher than those for Comparable Companies?I. Scarcity of meaningful...

Which type of exchange ratio is most common in a stock transaction?

Which type of exchange ratio is most common in a stock transaction?  A) Fixed B) Foreign C) Equal D) Floating Answer:...

Which two of the following are important sources for identifying trends for a given industry? I. Sector sell-side research reports II. Schedule 13D III. Most recent Form 8K IV. Company 10K

Which two of the following are important sources for identifying trends for a given industry?I. Sector sell-side research reportsII. Schedule 13DIII....

Which of the following is a financial database used to screen for precedent transactions?

Which of the following is a financial database used to screen for precedent transactions? A) SDS Platinum B) EDGAR C) IBES D) NAICS Answer:...

For which reasons might target shareholders prefer stock to cash as purchase consideration in an M&A transaction? I. Highest premium paid II. Ability to retain upside III. Tax planning IV. Fixed Value

For which reasons might target shareholders prefer stock to cash as purchase consideration in an M&A transaction?I. Highest premium paidII. Ability...

Who assumes share price movement risks in a fixed exchange ratio, assuming no structural protections?

Who assumes share price movement risks in a fixed exchange ratio, assuming no structural protections? A) The target company B) The acquiring company C)...

Who assumes share price movement risks in a floating exchange ratio, assuming no structural protections?

Who assumes share price movement risks in a floating exchange ratio, assuming no structural protections? A) The target company B) The acquiring...

Which type of exchange ratio is most common in a stock transaction?

Which type of exchange ratio is most common in a stock transaction? A) Fixed B) Foreign C) Equal D) Floating Answer:...

Which type of offer do private equity firms typically make for private companies?

Which type of offer do private equity firms typically make for private companies? A) All stock B) All cash C) Cash/stock mix D) Merger of equals Answer:...

What does the control premium refer to in an M&A transaction?

What does the control premium refer to in an M&A transaction? A) The right for the acquirer to control decisions regarding the target's business B)...

For a public company with 200 million basic shares outstanding, if one were to buy 110 million shares versus 110 shares, the investor would expect to pay

For a public company with 200 million basic shares outstanding, if one were to buy 110 million shares versus 110 shares, the investor would expect to...

All of the following help explain why precedent transactions are calculated on the basis of the target's LTM earnings versus earnings estimates EXCEPT

All of the following help explain why precedent transactions are calculated on the basis of the target's LTM earnings versus earnings estimates EXCEPT A)...

Which criteria are relevant for determining whether a given precedent transaction is relevant for valuing the target company in an M&A scenario? I. Target company sector II. Period during which the transaction took place III. Size of target company IV. Target company domicile

Which criteria are relevant for determining whether a given precedent transaction is relevant for valuing the target company in an M&A scenario?I....

Which of the following would not generally be considered an extraordinary item on a company's income statement?

Which of the following would not generally be considered an extraordinary item on a company's income statement?  A) Business disruption from...

What restrictions are typically in place on a day-to-day basis to regulate communication between industry banks and M&A investment bankers?

What restrictions are typically in place on a day-to-day basis to regulate communication between industry banks and M&A investment bankers?  A)...

Assuming that a company's average stockholder equity remains constant, how can a company achieve a 15% increase in its equity turnover?

Assuming that a company's average stockholder equity remains constant, how can a company achieve a 15% increase in its equity turnover?  A)...

Adjusting for non-recurring items is essential when analyzing a company because I. It is a requirement under SEC regulations II. It provides an indicative view of a company's performance III. Failure to do so may lead to the calculation of misleading ratios and multiples IV. It is a primary means to detect accounting fraud

Adjusting for non-recurring items is essential when analyzing a company becauseI. It is a requirement under SEC regulationsII. It provides an indicative...

Given the information provided in Exhibit 27, determine the company's return on invested capital.

Given the information provided in Exhibit 27, determine the company's return on invested capital.  A) 20.00% B) 30.00% C) 50.00% D) 60.00% Answer:...

All of the following are typically good sources for finding a given private company's primary competitors EXCEPT

All of the following are typically good sources for finding a given private company's primary competitors EXCEPT A) a public competitor's 10-K B)...

What does the colloquial term "top line" refer to?

What does the colloquial term "top line" refer to?  A) Sales B) Quality of earnings C) Quality of sales D) EBITDA Answer:...

Which of the following are primary business-related characteristics to consider when locating companies to use in a comparable companies analysis? I. Sector II. Deal dynamics III. Products and Services IV. Purchase consideration

Which of the following are primary business-related characteristics to consider when locating companies to use in a comparable companies analysis?I....

Where might one be able to gather business, financial and market information on a private company? I. Earnings call transcripts II. Research reports for public competitors III. The company's most recent 10-Q IV. Trade magazines and journals

Where might one be able to gather business, financial and market information on a private company?I. Earnings call transcriptsII. Research reports for...

Which of the following best describes EDGAR?

Which of the following best describes EDGAR?  A) Database for collection of SEC filings B) Division of the SEC responsible for anti-trust cases C)...

All of the following may provide insight on comparable companies for a given private company EXCEPT

All of the following may provide insight on comparable companies for a given private company EXCEPT  A) EDGAR B) a fairness opinion for a recent...

Which of the following refers to the sum of all ownership interests in a company and claims on its assets from both debt and equity holders?

Which of the following refers to the sum of all ownership interests in a company and claims on its assets from both debt and equity holders?  A)...

All of the following are good sources for locating comparable companies for a given public company EXCEPT

All of the following are good sources for locating comparable companies for a given public company EXCEPT  A) a fairness opinion for a recent...

Adjusting a company's fiscal year financials to conform to a calendar year is known as

Adjusting a company's fiscal year financials to conform to a calendar year is known as  A) calendarizing B) adjusting C) benchmarking D) scrubbing Answer:...

Investment bankers typically track all of the following terms for high yield bond deal precedent transactions in the marketplace EXCEPT

Investment bankers typically track all of the following terms for high yield bond deal precedent transactions in the marketplace EXCEPT  A)...

A valuation multiple that is used as a multiple of unlevered financial statistics such as sales, EBITDA, and EBIT is also known as a(n)

A valuation multiple that is used as a multiple of unlevered financial statistics such as sales, EBITDA, and EBIT is also known as a(n)  A)...

Which two of the following are key sources for finding analyst research coverage for a given public company? I. Corporate website II. 10-K III. CIM IV. Bloomberg

Which two of the following are key sources for finding analyst research coverage for a given public company?I. Corporate websiteII. 10-KIII. CIMIV....

Which of the following are helpful resources for creating a universe of comparable companies for a given public company? I. Equity research reports II. Form 13F III. Fairness opinions for comparable companies IV. Schedule 13D

Which of the following are helpful resources for creating a universe of comparable companies for a given public company?I. Equity research reportsII....

Which of the following serves as the basis for the buy-side adviser's financial analysis and valuation work?

Which of the following serves as the basis for the buy-side adviser's financial analysis and valuation work?  A) Financial model B) Rating...

At a minimum, how frequently do sell-side research analysts typically publish reports for a given public company?

At a minimum, how frequently do sell-side research analysts typically publish reports for a given public company?  A) On a daily basis B) On...

Which of the following are necessary for an item to be classified as extraordinary? I. The item must be infrequent in occurrence II. The item must be non-material in nature III. The item must be likely to occur in the future IV. The item must be unusual in nature

Which of the following are necessary for an item to be classified as extraordinary?I. The item must be infrequent in occurrenceII. The item must be...

Earnings per share on an income statement in an SEC filing are shown in which of the following formats? I. Income from continuing operations II. Net income III. Basic IV. Diluted

Earnings per share on an income statement in an SEC filing are shown in which of the following formats?I. Income from continuing operationsII. Net incomeIII....

A company has a target of generating a return on invested capital (ROIC) of at least 12%. The company's total capital, including equity, debt and preferred shares, is $200 million. It pays out $11 million in annual dividends on common stock. What net income will hit the ROIC target?

A company has a target of generating a return on invested capital (ROIC) of at least 12%. The company's total capital, including equity, debt and preferred...

Key advantages for Comparable Companies as a valuation methodology include which of the following? I. It is market-based II. It reflects a company's future long-term free cash flow generation III. The analysis can include both public and private companies IV. It is not dependent on long-term company performance assumptions

Key advantages for Comparable Companies as a valuation methodology include which of the following?I. It is market-basedII. It reflects a company's future...

For a company with total debt of $60 million, most of which is short-term, how will a sharp increase in interest rates affect the company's interest coverage ratio?

For a company with total debt of $60 million, most of which is short-term, how will a sharp increase in interest rates affect the company's interest...

What does the colloquial term "bottom line" refer to?

What does the colloquial term "bottom line" refer to?  A) EBITDA B) Revenue C) Operating profit D) Net income Answer:...

All of the following are helpful resources for calculating key financial metrics and multiples for a universe of comparable companies for a given target EXCEPT

All of the following are helpful resources for calculating key financial metrics and multiples for a universe of comparable companies for a given target...

Given the information provided in Exhibit 29, determine the company's return on assets.

Given the information provided in Exhibit 29, determine the company's return on assets.  A) 1.00% B) 5.00% C) 10.00% D) 20.00% Answer:...

A solvency ratio is used to measure a company's ability to do which of the following?

A solvency ratio is used to measure a company's ability to do which of the following?  A) Meet its long-term obligations B) Meet its earnings...

Which two of the following do public companies typically provide on their corporate website? I. P/E multiples II. Stock price III. EV/EBITDA multiples IV. Investor presentations

Which two of the following do public companies typically provide on their corporate website?I. P/E multiplesII. Stock priceIII. EV/EBITDA multiplesIV....

Which of the following is a code for screening companies by sector?

Which of the following is a code for screening companies by sector?  A) ROIC B) NWC C) SIC D) IBES Answer:...

Based on annual EBITDA and annual interest expense, a company has an interest coverage ratio of 6.5. How many days worth of EBITDA will it take to pay 100% of annual interest expense?

Based on annual EBITDA and annual interest expense, a company has an interest coverage ratio of 6.5. How many days worth of EBITDA will it take to pay...

Which of the following are financial-related characteristics to consider when locating companies to use in a comparable companies analysis? I. Market conditions II. Size III. Profitability IV. Deal dynamics

Which of the following are financial-related characteristics to consider when locating companies to use in a comparable companies analysis?I. Market...

To be classified as "extraordinary" on the income statement, an expense item must be nonrecurring, material and differ significantly from a company's typical activities. In addition, it must be:

To be classified as "extraordinary" on the income statement, an expense item must be nonrecurring, material and differ significantly from a company's...

Interest coverage is a measure of

Interest coverage is a measure of  A) a company's overall debt level B) a company's ability to meet its short-term obligations C) a company's...

Leverage is a measure of

Leverage is a measure of  A) a company's overall debt level B) a company's ability to meet its short-term obligations C) a company's covenant...