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Which of the following would be the most appropriate action by Company C's directors following receipt of this hostile bid?
Company C has received an unwelcome takeover bid from Company P. Company P is approximately twice the size of Company C based on market capitalisation. Although the two companies have some common business interests, the main aim of the bid is diversification for Company P. The offer from Company P...
If a company's bonds are currently yielding 8% in the marketplace, why would the entity's cost of debt be lower than this?
If a company's bonds are currently yielding 8% in the marketplace, why would the entity's cost of debt be lower than this?A . There should be no difference; the cost of debt is the same as the bond's market yield.B . Interest is deductible for tax purposes.C . The company's...
Which THREE of the following are likely to be strategic reasons for a horizontal acquisition?
Which THREE of the following are likely to be strategic reasons for a horizontal acquisition?A . Reduction of risk by building a larger portfolioB . Acquisition of an undervalued companyC . To achieve economies of scaleD . To secure key parts of the value chainE . Reduction of competitionView AnswerAnswer:...
Advise the directors which of the following statements would justify the issue of preference shares over a bond?
A company plans to raise finance for a new project. It is considering either the issue of a redeemable cumulative preference share or a Eurobond. Advise the directors which of the following statements would justify the issue of preference shares over a bond?A . Preference shares are not secured against...
Advise the Board of Directors which of the following will be the status of compliance with the loan covenants next year?
A company has in a 5% corporate bond in issue on which there are two loan covenants. • Interest cover must not fall below 3 times • Retained earnings for the year must not fall below $3.5 million The Company has 200 million shares in issue. The most recent dividend...
Which of the following would be the most appropriate action by Company C's directors following receipt of this hostile bid?
Company C has received an unwelcome takeover bid from Company P. Company P is approximately twice the size of Company C based on market capitalisation. Although the two companies have some common business interests, the main aim of the bid is diversification for Company P. The offer from Company P...
A company proposes to value itself based on the net present value of estimated future cash flows.
A company proposes to value itself based on the net present value of estimated future cash flows. Relevant data: • The cash flow for the next three years is expected to be £100 million each year • The cash flow after year 3 will grow at 2% to perpetuity •...
A consultancy company is dependent for profits and growth on the high value individuals it employs.
A consultancy company is dependent for profits and growth on the high value individuals it employs. The company has relatively few tangible assets. Select the most appropriate reason for the net asset valuation method being considered unsuitable for such a company.A . It does not account for the intangible assets.B...
Which form of efficient market is most likely to be indicated by this share price movement?
A listed company has recently announced a profit warning. The company's share price fell 20% on the day of the announcement but had been fairly static in the weeks leading up to the announcement. Which form of efficient market is most likely to be indicated by this share price movement?A...
Which of the following is currently most likely to increase shareholder wealth in respect of the surplus cash?
Company A has a cash surplus. The discount rate used for a typical project is the company's weighted average cost of capital of 10%. No investment projects will be available for at least 2 years. Which of the following is currently most likely to increase shareholder wealth in respect of...
