This morning, Krystal purchased shares of Global Markets stock at a cost of $39.40 per share

43.

Pure financial mergers:    A.  are beneficial to stockholders. B.  are beneficial to both stockholders and bondholders. C.  are detrimental to stockholders. D.  add value to both the total assets and the total equity of a firm. E.  reduce both the total assets and the total equity of a firm. Refer to section 25.5

44.

A purely financial merger:    A.  increases the risk that the merged firm will default on its debt obligations. B.  has no effect on the risk level of the firm's debt. C.  reduces the value of the option to go bankrupt. D.  has no effect on the equity value of a firm. E.  reduces the risk level of the firm and increases the value of the firm's equity. Refer to section 25.5

45.

Which one of the following statements is correct?    A.  Mergers benefit shareholders but not creditors. B.  Positive NPV projects will automatically benefit both creditors and shareholders. C.  Shareholders might prefer a negative NPV project over a positive NPV project. D.  Creditors prefer negative NPV projects while shareholders prefer positive NPV projects. E.  Mergers rarely affect bondholders. Refer to section 25.5

46.

This morning, Krystal purchased shares of Global Markets stock at a cost of $39.40 per share. She simultaneously purchased puts on Global Markets stock at a cost of $1.50 per share and a strike price of $40 per share. The put expires in one year. How much profit will she earn per share on these transactions if the stock is worth $38 a share one year from now?    A.  -$2.65 B.  -$1.25 C.  -$0.90 D.  $0.60 E.  $1.25 Profit = $40 - $39.40 - $1.50 = -$0.90