AM - manageable, PM - madness. Agreed?

CFA Level II
#41

1/.0032

#42

The gain to the target was 78, and the gain to the acquirer is 105 (synergies) minus the gain to the target (78)…I think

#43

agreed , AM was easy and PM especially the port. mgmt. was difficult Can I pass if I get say 90% of the port management section questions wrong but overall get above 70% ?

#44

Why was it a cyclical companY? I thought it was a mature company. They had a lot of competitors and they were only making a profit because they were cutting costs?

#45

Yea, i think the key there though was it said in the question “in response to changes in the business cycle…” I picked cyclical as well b/c it said with a recession looming it would hurt their business. I may have picked mature as my answer if the question didn’t say “in response to changes int he business cycle”

#46

drexi Wrote: ------------------------------------------------------- > if we talk about the same question set no.2 was > supplier contracts (not barriers to entry). It > said that the company had individual suppliers and > in the industry section of the report they said > that supplier power is high. Therefore, > competitive advantage for the company… If their suppliers have high bargaining power, how is that an advantage to the company?

#47

SanFranMatt Wrote: ------------------------------------------------------- > drexi Wrote: > -------------------------------------------------- > ----- > > if we talk about the same question set no.2 was > > supplier contracts (not barriers to entry). It > > said that the company had individual suppliers > and > > in the industry section of the report they said > > that supplier power is high. Therefore, > > competitive advantage for the company… > > If their suppliers have high bargaining power, how > is that an advantage to the company? Agreed… If suppliers have strong bargaining power, then it makes the consumer (in this case the metals company) less competitive. In the vignette it said ‘capital intensive’, pretty sure that would be the major barrier to entry.

#48

false on the acquirer gain - note the differences in the question swith synergy size 0 , imn the first, 105 in the second so: 78 is right for the first one… but… 495+105 gain +1750 / 47M securities = 50$ share price

#49

You had to eliminate the lifecycle stage answers because it was about how business cycles effect types of companies (i.e growth, defense, cyclical).

#50

Got 78 and 27 for those.

#51

I also put cyclical and there were large economies of scale (barrier to entry)

#52

yeah the synergies (o in the first, 105 in the second) made a difference, do they not?

#53

The synergies don’t matter for the gain to the target. The gain is just whatever was paid. The gain to the acquire r is the difference between synergies and premium.

#54

synergies definitely matter if the target is getting stock

#55

You’re right, i forget how I did it. I did get 78 and 27, don’t know if thats right or wrong though.

#56

nibs… if that were the case, the gain to the target would have been .8*15m shares *(50-.33) = 105

#57

gain to target is .80*15= 12 new shares *35 (share price of acqueier BEFORE takeover) = 420 - (target MV pre-offer) = 105. Yes or No? Gain to acqueirer = same answer as dirtydirty.

#58

my answer (not what i put on the exam) would be 1750+495/47M shares = 47.28 or something like that… then 47.28-33*12m shares = gain to target second part 105+ 1750+495 = 2350/47 = 50, so all gain goes to target as no hit to acquirer

#59

Seeing these discussions blows, I think I am signing off AF until results.

#60

i got 78 and 27 too Niblitas as i recall…