P1- Even with the flaws, mergers remain common.
P2- trying to explain above raised concerns.
Main point - acquisitions, their flaws, why they are there.
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 -- benefits of corporate mergers/ no
(B) contrast the effects of corporate mergers and acquisitions on acquiring firms and on firms that are acquired - no
(C) report findings that raise questions about a reason for corporate mergers and acquisitions and suggest possible alternative reasons - yes. why acquisitions defined.
(D) explain changes in attitude on the part of acquiring firms toward corporate mergers and acquisitions - no
(E) account for a recent decline in the rate of corporate mergers and acquisitions - no
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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?
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.
(A) They include a decrease in value of many acquiring firms’ stocks. - no
(B) They tend to be more beneficial for small firms than for large firms. - no
(C) They do not fulfill the professed goals of most acquiring firms. - yes, this one must be the answer.
(D) They tend to be beneficial to such firms in the long term even though apparently detrimental in the short term. - no
(E) They discourage many such firms from attempting to make subsequent bids and acquisitions. - no
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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?
anchor - corporate acquisitions
(A) Their known benefits to national economies explain their appeal to individual firms during the 1970s and 1980s.- no
(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. - we donr know about it.
(C) They are as likely to occur because of poor monitoring by boards of directors as to be caused by incentive compensation for managers. - this made the factor huge. well its not the main reason.
(D) They will be less prevalent in the future, since their actual effects will gain wider recognition. - no
(E) Factors other than economic benefit to the acquiring firm help to explain the frequency with which they occur. - yes
It seems that factors having little to do with corporate economic interests explain acquisitions.
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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 - no
(B) suggest that national economic interests played an important role in the mergers and acquisitions of the 1970s and 1980s - no
(C) support a noneconomic explanation for the mergers and acquisitions of the 1970s and 1980s that was cited earlier in the passage - no
(D) cite and point out the inadequacy of one possible explanation for the prevalence of mergers and acquisitions during the 1970s and 1980s - y; well no one explanation is there.
(E) explain how modeling affected the decisions made by managers involved in mergers and acquisitions during the 1970s and 1980s - no
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68. According to the passage, during the 1970s and 1980s bidding firms differed from the firms for which they bid in that bidding firms
(E) experienced less of an increase in stock value when a prospective merger was announced - y
the stock of the prospective acquiring firm tends to increase in value much less than does that of the firm for which it bids.
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69. According to the passage, which of the following was true of corporate acquisitions that occurred during the 1970s and 1980s?
look into P1
(D) The gains realized by most acquiring firms did not equal the amounts expended in acquiring target firms. - no
A second study concluded that post-acquisition gains to most acquiring firms were not adequate to cover the premiums paid to obtain acquired firms.
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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. - no
(B) Managers miscalculated the value of firms that were to be acquired - yes; managerial error in estimating the value of firms targeted for acquisition. best of the lot.
(C) Lack of consensus within boards of directors resulted in their imposing conflicting goals on managers. - No; lack of monitoring by boards of directors.
(D) Total compensation packages for managers increased during that period. - no; the incentive compensation of executives
(E) The value of bidding firms’ stock increased significantly when prospective mergers were announced.- no
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Simple strategy:
“Once you’ve eliminated the impossible, whatever remains, however improbable, must be the truth.”
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Reading comprehension | Critical Reasoning | Absolute Phrases | Subjunctive Mood
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