Series 79 – Investment Banking Representative Exam Mergers & Acquisitions Transactions

Question 1

In an M&A transaction, what is a 'fairness opinion'?

Accepted Answer

An independent assessment by a financial advisor that the deal price is fair

Answer

A legal document filed with the SEC

Answer

A board resolution approving the transaction

Answer

A FINRA requirement for all public mergers

Question 2

Which merger structure allows the acquirer to purchase only selected assets and liabilities of the target company?

Accepted Answer

Asset acquisition

Answer

Stock acquisition

Answer

Reverse merger

Answer

Leveraged buyout

Question 3

What is a 'lock-up agreement' in the context of M&A?

Accepted Answer

A restriction on target management from soliciting other bids after signing

Answer

A financing commitment from lenders

Answer

An SEC filing required within 48 hours of a merger announcement

Answer

A standstill agreement between two competing bidders

Question 4

Under the Hart-Scott-Rodino (HSR) Act, when must parties notify the FTC and DOJ of a proposed merger?

Accepted Answer

When the transaction exceeds the applicable HSR threshold size-of-transaction test

Answer

Only when the target is a public company

Answer

All mergers regardless of size

Answer

When the acquirer is a foreign entity

Question 5

What does 'accretion/dilution analysis' measure in an M&A context?

Accepted Answer

The impact of an acquisition on the acquirer's earnings per share (EPS)

Answer

The change in book value of assets after a merger

Answer

The percentage premium paid over market price

Answer

The change in the target's credit rating post-merger

Question 6

In a hostile takeover, a 'bear hug' is best described as:

Accepted Answer

A public letter to the target's board making an unsolicited high-premium offer and pressuring acceptance

Answer

A tender offer launched directly to shareholders without board approval

Answer

A poison pill defense mechanism

Answer

A white knight bidder entering the auction