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Question 1
In a merger transaction, X Corp is going to disappear. The other company, Y Corp, will continue to do business. In this context, Y Corp is known as the:
Correct
Incorrect!
Correct The company that exists after a merger transaction is known as the 'surviving company.' This is because the selling company is no longer in existence from a legal standpoint, but has, instead, been combined with the surviving firm.
Incorrect! The company that exists after a merger transaction is known as the 'surviving company.' This is because the selling company is no longer in existence from a legal standpoint, but has, instead, been combined with the surviving firm.
Correct
Incorrect!
Correct
Incorrect!
Question 2
In a merger or consolidation, the debts, liabilities, rights, and obligations of the non-surviving firm are:
Correct
Incorrect!
Correct In a merger or consolidation transaction, the result of the transaction is that the new, combined firm (the surviving firm) assumes all of the rights, responsibilities, and obligations of the extinguished firm. Thus, while the new firm gets the benefits of all of the contracts, employees, etc. of the old firm, it also becomes responsible for that firm's debts and legal obligations.
Incorrect! In a merger or consolidation transaction, the result of the transaction is that the new, combined firm (the surviving firm) assumes all of the rights, responsibilities, and obligations of the extinguished firm. Thus, while the new firm gets the benefits of all of the contracts, employees, etc. of the old firm, it also becomes responsible for that firm's debts and legal obligations.
Correct
Incorrect!
Correct
Incorrect!
Question 3
In a standard merger transaction, A is the selling corporation and B is the buying corporation. Which of the following individuals will have the right to vote on the transaction?
Correct In a standard merger transaction, the only individuals who are entitled to vote on the transaction are the shareholders of the selling company. The logic behind such a vote is that the shareholders of that company will no longer have ownership in the property that constituted their original investment. As such, they should have some say before that property is taken away.
Incorrect! In a standard merger transaction, the only individuals who are entitled to vote on the transaction are the shareholders of the selling company. The logic behind such a vote is that the shareholders of that company will no longer have ownership in the property that constituted their original investment. As such, they should have some say before that property is taken away.
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Question 4
To complete a merger transaction, the board of the selling company must complete which of the following tasks?
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct In order to properly complete a merger transaction, the board of the selling company must first complete all the above steps in order to avoid any legal liability for the deal. The reason for the plan's distribution is that shareholders need to be informed as to what the firm is planning prior to their vote. The certificate of merger informs the state of the effective result on the firms and provides a means for informing each firm's creditors about the change of status.
Incorrect! In order to properly complete a merger transaction, the board of the selling company must first complete all the above steps in order to avoid any legal liability for the deal. The reason for the plan's distribution is that shareholders need to be informed as to what the firm is planning prior to their vote. The certificate of merger informs the state of the effective result on the firms and provides a means for informing each firm's creditors about the change of status.
Question 5
A "short-form" merger is completed by a:
Correct
Incorrect!
Correct
Incorrect!
Correct A short-form merger is defined as a merger between a parent company and one of its subsidiaries in which the parent company owns 90% or more of each class of the subsidiary company's stock. The reason that such a transaction is referred to as a 'short-form' merger is because it may be accomplished without a shareholder vote from the subsidiary firm.
Incorrect! A short-form merger is defined as a merger between a parent company and one of its subsidiaries in which the parent company owns 90% or more of each class of the subsidiary company's stock. The reason that such a transaction is referred to as a 'short-form' merger is because it may be accomplished without a shareholder vote from the subsidiary firm.