04 EOC4 - Question 1 (1 point) The three main advantages of...

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Question 1 (1 point) The three main advantages of holding companies are (1) control with fractional ownership, (2) taxation benefits , and (3) isolation of operating risks. a. True b. False Question 2 (1 point) A company seeking to fight off a hostile takeover might employ the services of an investment banking firm to develop a defensive strategy. a. True b. False Question 3 (1 point) Since the basic rationale for any operating merger is synergy, in planning such mergers, the development of accurate pro forma cash flows is the single most important aspect of the analysis. a. True b. False Question 4 (1 point) In a synergistic merger, the post-merger value exceeds the sum of the separate companies' pre-merger values. a. True b. False Question 5 (1 point) Volunteer Pizza, a regional pizza chain, is considering purchasing a smaller chain, Eastern Pizza, which is currently financed with 20 percent debt at a cost of 8%. American's analysts project that the merger will result in incremental free cash flows and
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This note was uploaded on 05/12/2010 for the course BUSINESS BS525 taught by Professor Matthews during the Winter '10 term at Drexel.

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04 EOC4 - Question 1 (1 point) The three main advantages of...

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