FIN 351 TEXT QUIZ CHAPTER 10

51 Special or abnormal returns refer to
A The Efficient Market Hypothesis
B Gains in excess of the market risk adjusted average
C. Convertibles and warrants, etc
D. More than one of the above
52. From the time prior to announcement until an acquisition takes effect, the value of the stock of the
acquiring company will likely
A. Rise sharply
B. Rise sharply, then slowly fall
C. Remain largely unchanged
D. Fall slowly, then rise sharply
E. None of the above
53. The stock price of an acquisition candidate changes dramatically prior to announcement because of
A. The candidate's estimated cost of capital
B. The high premium offered for the stock of the candidate
C. Information leaks
D. More than one of the above
54. Legal methods for attempting to profit through mergers and acquisitions include all of the following
except identifying
A. An insider close to the information
B. Candidates through financial or operating characteristics
C. Securities which are undergoing unusual volume or pricing patterns
D. Industries where companies are being absorbed
55. The major problem associated with trying to profit from mergers and acquisitions is
A. That contradictory information is available
B. Pinpointing reasons for stock price changes
C. The threat of cancellation
D. None of the above