Q1. Define each of the following terms:
a. Synergy; merger
b. Horizontal merger; vertical merger; congeneric merger; conglomerate merger
c. Friendly merger; hostile merger, defensive merger; tender offer; target company; breakup value; acquiring company
d. Operating merger; financial merger
e. Free ash flow to equity
f. Purchase accounting
g. White knight: proxy fight
h. Joint venture; corporate alliance
i. Divestiture; spin-off
j. Holding company; operating company; parent company
k. Arbitrage; risk arbitrage
Q2. Give two reasons why stockholders might be indifferent between owning the stock of a firm with volatile cash flows and that of a firm with stable cash flows.
Q3. List six reasons why risk management might increase the value of a firm.