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1- The stock market's "Conglomerate Discount" suggests that the market believes that corporate mergers and acquisitions often:
A. result in major cost savings due to economies of scope.
B. result in major cost savings due to economies of scale.
C. result in major efficiency gains.
D. result in losses due to inefficiencies.
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2- Investments in technology:
A. benefit large banks more than small banks.
B. primarily increase revenues rather than cut costs.
C. Both answers are correct.
D. None of these answers are correct.
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3- All of the following are correct except:
A. Mergers and acauisitions have been found to reduce back office costs.
B. Merger bid premiums are a measure of the attractiveness of a merger.
C. Merger bid premiums are highest for banks with high-quality loan portfolios.
D. There are no exceptions. All of these answers are true.
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4- The term "Fire-Walls" refers to:
A. limiting bank loans to other bank holding company subsidiaries.
B. walling off insurance companies from finance companies.
C. walling off the fires of inflation.
D. walling off certain activities by merging banks.
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5- If economies of scope are significant, this would primarily encourage:
A. product expansion.
B. domestic geographic expansion.
C. international expansion.
D. significantly higher conglomerate discounts.
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