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1. What are some of the reasons why firms merge with other firms?
2. What methods do financial analysts use to value merger candidates? What are the limitations of each method?
3. Explain what happens to the postmerger earnings-per-share figure when a company with a relatively high P/E ratio acquires a company with a lower P/E ratio, assuming that the exchange ratio is based on current stock market prices and no synergy exists.
4. What are the differences between the purchase method and the pooling of interests method of accounting for mergers?
5. What is a leveraged buyout? What is mezzanine financing?
6. What is a tax-free merger?
7. Explain the difference between the economic and financial definitions of business failure.
Community banks continue to play a strong role in the economy because:
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