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Question 1
ZXY and CBA are corporations undertaking a consolidation. Which of the following groups is allowed to vote on the transaction?
Correct
Incorrect!
Correct
Incorrect!
Correct In a consolidation, shareholders of both firms involved in the transaction are entitled to vote on the transaction. The reason for this is that shareholders of both firms are effectively trading in the property that they owned previously for new property. Given this change, shareholders in both firms are entitled to a vote.
Incorrect! In a consolidation, shareholders of both firms involved in the transaction are entitled to vote on the transaction. The reason for this is that shareholders of both firms are effectively trading in the property that they owned previously for new property. Given this change, shareholders in both firms are entitled to a vote.
Correct
Incorrect!
Question 2
In an all stock or partial stock transaction, which combines two firms, the court may have a particularly difficult time in an appraisal action because:
Correct
Incorrect!
Correct In a standard appraisal action, the court is faced with the task of valuing the company, which has likely already been sold and redesigned to merge into the new firm. However, in a sale with stock of the purchaser involved, an appraisal transaction will not only result in the court having to value the selling company, but will also require a valuing of the shares provided by the seller as consideration in the deal.
Incorrect! In a standard appraisal action, the court is faced with the task of valuing the company, which has likely already been sold and redesigned to merge into the new firm. However, in a sale with stock of the purchaser involved, an appraisal transaction will not only result in the court having to value the selling company, but will also require a valuing of the shares provided by the seller as consideration in the deal.
Correct
Incorrect!
Correct
Incorrect!
Question 3
A company that has taken has a large amount of debt and a high monthly debt payment is said to have a(n):
Correct
Incorrect!
Correct
Incorrect!
Correct High debt load is simply another way of saying that a company has a large amount of debt on its balance sheet. Servicing that debt, another way of saying that the debt is being paid, is something that the company will do in paying the debt (generally on a monthly or quarterly basis.) Keep in mind that debt on a company's balance sheet is not necessarily a bad thing. A justified and conservative amount of borrowing is generally appropriate for any company.
Incorrect! High debt load is simply another way of saying that a company has a large amount of debt on its balance sheet. Servicing that debt, another way of saying that the debt is being paid, is something that the company will do in paying the debt (generally on a monthly or quarterly basis.) Keep in mind that debt on a company's balance sheet is not necessarily a bad thing. A justified and conservative amount of borrowing is generally appropriate for any company.
Correct
Incorrect!
Question 4
After a consolidation, which of the following companies exists after the transaction?
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct From a legal standpoint, a consolidation results in a situation where neither corporation that entered the transaction still exists after the transaction is completed. Rather, the two companies that entered into the deal are merged into a new company that combines the rights and obligations of the former firms.
Incorrect! From a legal standpoint, a consolidation results in a situation where neither corporation that entered the transaction still exists after the transaction is completed. Rather, the two companies that entered into the deal are merged into a new company that combines the rights and obligations of the former firms.