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Updated on: 15 Jul 2025, 13:31
Originally posted by daagh on 12 Oct 2013, 11:50.
Last edited by Sajjad1994 on 15 Jul 2025, 13:31, edited 9 times in total.
Last edited by Sajjad1994 on 15 Jul 2025, 13:31, edited 9 times in total.
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Question 1
C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
15%
(low)
Question Stats:
77% (02:47) correct
23%
(02:53) wrong
based on 5513
sessions
History
Date
Time
Result
Not Attempted Yet
Question 2
C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
65% (01:23) correct 35%
(01:23) wrong
based on 5657
sessions
History
Date
Time
Result
Not Attempted Yet
Question 3
E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
58% (01:20) correct 42%
(01:29) wrong
based on 5563
sessions
History
Date
Time
Result
Not Attempted Yet
Question 4
D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
65%
(hard)
Question Stats:
49% (01:32) correct 51%
(01:40) wrong
based on 5292
sessions
History
Date
Time
Result
Not Attempted Yet
Question 5
E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
25%
(medium)
Question Stats:
65% (01:09) correct 35%
(01:18) wrong
based on 5112
sessions
History
Date
Time
Result
Not Attempted Yet
Question 6
D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
5%
(low)
Question Stats:
82% (01:06) correct 18%
(01:13) wrong
based on 4899
sessions
History
Date
Time
Result
Not Attempted Yet
Question 7
B
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
60% (01:11) correct 40%
(01:10) wrong
based on 4863
sessions
History
Date
Time
Result
Not Attempted Yet
Findings from several studies on corporate mergers and acquisitions during the 1970s and 1980s raise questions about why firms initiate and consummate such transactions. One study showed, for example, that acquiring firms were on average unable to maintain acquired firms’ pre-merger levels of profitability. A second study concluded that post-acquisition gains to most acquiring firms were not adequate to cover the premiums paid to obtain acquired firms. A third demonstrated that, following the announcement of a prospective merger, the stock of the prospective acquiring firm tends to increase in value much less than does that of the firm for which it bids. Yet mergers and acquisitions remain common, and bidders continue to assert that their objectives are economic ones.
Acquisitions may well have the desirable effect of channeling a nation’s resources efficiently from less to more efficient sectors of its economy, but the individual acquisitions executives arranging these deals must see them as advancing either their own or their companies’ private economic interests. It seems that factors having little to do with corporate economic interests explain acquisitions. These factors may include the incentive compensation of executives, lack of monitoring by boards of directors, and managerial error in estimating the value of firms targeted for acquisition. Alternatively, the acquisition acts of bidders may derive from modeling: a manager does what other managers do.
Acquisitions may well have the desirable effect of channeling a nation’s resources efficiently from less to more efficient sectors of its economy, but the individual acquisitions executives arranging these deals must see them as advancing either their own or their companies’ private economic interests. It seems that factors having little to do with corporate economic interests explain acquisitions. These factors may include the incentive compensation of executives, lack of monitoring by boards of directors, and managerial error in estimating the value of firms targeted for acquisition. Alternatively, the acquisition acts of bidders may derive from modeling: a manager does what other managers do.
Questions 64–70 refer to the passage above.
64. The primary purpose of the passage is to
(A) review research demonstrating the benefits of corporate mergers and acquisitions and examine some of the drawbacks that acquisition behavior entails
(B) contrast the effects of corporate mergers and acquisitions on acquiring firms and on firms that are acquired
(C) report findings that raise questions about a reason for corporate mergers and acquisitions and suggest possible alternative reasons
(D) explain changes in attitude on the part of acquiring firms toward corporate mergers and acquisitions
(E) account for a recent decline in the rate of corporate mergers and acquisitions
(A) review research demonstrating the benefits of corporate mergers and acquisitions and examine some of the drawbacks that acquisition behavior entails
(B) contrast the effects of corporate mergers and acquisitions on acquiring firms and on firms that are acquired
(C) report findings that raise questions about a reason for corporate mergers and acquisitions and suggest possible alternative reasons
(D) explain changes in attitude on the part of acquiring firms toward corporate mergers and acquisitions
(E) account for a recent decline in the rate of corporate mergers and acquisitions
65. The findings cited in the passage suggest which of the following about the outcomes of corporate mergers and acquisitions with respect to acquiring firms?
(A) They include a decrease in value of many acquiring firms’ stocks.
(B) They tend to be more beneficial for small firms than for large firms.
(C) They do not fulfill the professed goals of most acquiring firms.
(D) They tend to be beneficial to such firms in the long term even though apparently detrimental in the short term.
(E) They discourage many such firms from attempting to make subsequent bids and acquisitions.
66. It can be inferred from the passage that the author would be most likely to agree with which of the following statements about corporate acquisitions?
(A) Their known benefits to national economies explain their appeal to individual firms during the 1970s and 1980s.
(B) Despite their adverse impact on some firms,they are the best way to channel resources from less to more productive sectors of a nation’s economy.
(C) They are as likely to occur because of poor monitoring by boards of directors as to be caused by incentive compensation for managers.
(D) They will be less prevalent in the future, since their actual effects will gain wider recognition.
(E) Factors other than economic benefit to the acquiring fi rm help to explain the frequency with which they occur.
(A) Their known benefits to national economies explain their appeal to individual firms during the 1970s and 1980s.
(B) Despite their adverse impact on some firms,they are the best way to channel resources from less to more productive sectors of a nation’s economy.
(C) They are as likely to occur because of poor monitoring by boards of directors as to be caused by incentive compensation for managers.
(D) They will be less prevalent in the future, since their actual effects will gain wider recognition.
(E) Factors other than economic benefit to the acquiring fi rm help to explain the frequency with which they occur.
67. The author of the passage mentions the effect of acquisitions on national economies most probably in order to
(A) provide an explanation for the mergers and acquisitions of the 1970s and 1980s overlooked by the findings discussed in the passage
(B) suggest that national economic interests played an important role in the mergers and acquisitions of the 1970s and 1980s
(C) support a noneconomic explanation for the mergers and acquisitions of the 1970s and 1980s that was cited earlier in the passage
(D) cite and point out the inadequacy of one possible explanation for the prevalence of mergers and acquisitions during the 1970s and 1980s
(E) explain how modeling affected the decisions made by managers involved in mergers and acquisitions during the 1970s and 1980s
(A) provide an explanation for the mergers and acquisitions of the 1970s and 1980s overlooked by the findings discussed in the passage
(B) suggest that national economic interests played an important role in the mergers and acquisitions of the 1970s and 1980s
(C) support a noneconomic explanation for the mergers and acquisitions of the 1970s and 1980s that was cited earlier in the passage
(D) cite and point out the inadequacy of one possible explanation for the prevalence of mergers and acquisitions during the 1970s and 1980s
(E) explain how modeling affected the decisions made by managers involved in mergers and acquisitions during the 1970s and 1980s
68. According to the passage, during the 1970s and 1980s bidding firms differed from the firms for which they bid in that bidding firms
(A) tended to be more profi table before a merger than after a merger
(B) were more often concerned about the impact of acquisitions on national economies
(C) were run by managers whose actions were modeled on those of other managers
(D) anticipated greater economic advantages from prospective mergers
(E) experienced less of an increase in stock value when a prospective merger was announced
(A) tended to be more profi table before a merger than after a merger
(B) were more often concerned about the impact of acquisitions on national economies
(C) were run by managers whose actions were modeled on those of other managers
(D) anticipated greater economic advantages from prospective mergers
(E) experienced less of an increase in stock value when a prospective merger was announced
69. According to the passage, which of the following was true of corporate acquisitions that occurred during the 1970s and 1980s?
(A) Few of the acquisitions that f rms made were subsequently divested.
(B) Most such acquisitions produced only small increases in acquired firms’ levels of profitability.
(C) Most such acquisitions were based on an overestimation of the value of target firms.
(D) The gains realized by most acquiring firms did not equal the amounts expended in acquiring target firms.
(E) About half of such acquisitions led to long-term increases in the value of acquiring firms’ stocks.
(A) Few of the acquisitions that f rms made were subsequently divested.
(B) Most such acquisitions produced only small increases in acquired firms’ levels of profitability.
(C) Most such acquisitions were based on an overestimation of the value of target firms.
(D) The gains realized by most acquiring firms did not equal the amounts expended in acquiring target firms.
(E) About half of such acquisitions led to long-term increases in the value of acquiring firms’ stocks.
70. The author of the passage implies that which of the following is a possible partial explanation for acquisition behavior during the 1970s and 1980s?
(A) Managers wished to imitate other managers primarily because they saw how financially beneficial other firms’ acquisitions were.
(B) Managers miscalculated the value of firms that were to be acquired.
(C) Lack of consensus within boards of directors resulted in their imposing conflicting goals on managers.
(D) Total compensation packages for managers increased during that period.
(E) The value of bidding firms’ stock increased significantly when prospective mergers were announced.
(A) Managers wished to imitate other managers primarily because they saw how financially beneficial other firms’ acquisitions were.
(B) Managers miscalculated the value of firms that were to be acquired.
(C) Lack of consensus within boards of directors resulted in their imposing conflicting goals on managers.
(D) Total compensation packages for managers increased during that period.
(E) The value of bidding firms’ stock increased significantly when prospective mergers were announced.
18 Oct 2013, 00:13
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Question 67:
D would be the correct answer choice here. First, locate the sentence you need to read to answer this question. The impact on national economies is mentioned in the first line of the second paragraph, so we need go no farther then here to find the answer. What does this sentence say about the effect on national companies? That although there may be a positive effect, this is not why such deals were arranged. This implies that some people have considered the positive effect on national economies to be an explanation of all those mergers and acquisitions. Now, notice the bare logical structure of this sentence: X may well be..., but....Y. In other words, Although X, Y. What is X - Acquisitions' impact on national economies. What is Y? The company or personal interest of executives. So what this sentence telling us? That X is not an adequate explanation of mergers and acquisitions, but Y is. This is precisely what answer choice D is telling us: cite and point out the inadequacy of one possible explanation, etc.
D would be the correct answer choice here. First, locate the sentence you need to read to answer this question. The impact on national economies is mentioned in the first line of the second paragraph, so we need go no farther then here to find the answer. What does this sentence say about the effect on national companies? That although there may be a positive effect, this is not why such deals were arranged. This implies that some people have considered the positive effect on national economies to be an explanation of all those mergers and acquisitions. Now, notice the bare logical structure of this sentence: X may well be..., but....Y. In other words, Although X, Y. What is X - Acquisitions' impact on national economies. What is Y? The company or personal interest of executives. So what this sentence telling us? That X is not an adequate explanation of mergers and acquisitions, but Y is. This is precisely what answer choice D is telling us: cite and point out the inadequacy of one possible explanation, etc.
03 May 2018, 17:40
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BinhFantasia
"Yet mergers and acquisitions remain common, and bidders continue to assert that their objectives are economic ones." - The bidders (i.e. the acquiring firms) assert (or profess) that the deals will benefit their firms economically.
But the "second study concluded that post-acquisition gains to most acquiring firms were not adequate to cover the premiums paid to obtain acquired firms." If the premiums paid exceed the post-acquisition gains, then the firm would have lost money on the deal. Obviously this would not benefit the firm economically.
The bidders profess that they are doing the deals for economic reasons, but the study suggests that most bidding firms lose money on the deals. Thus, the outcomes of the deals do not fulfill the professed goals (economic gains) of the acquiring firms.
I hope that helps!
