Answers to Final Exams



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Answers-to-Final-Exams
Answer = b: Basket Amount



  1. You have been asked to determine if a proposed merger between Dystan and Systel could raise anti-trust concerns with the U.S. Justice Department. Based on market research, you have determined that all of the competing companies have the following market shares:

Company Market Share
Dystan 10%
Fabco 20%
Lytmar 30%
Systel 10%
United 10%
Zabor 10%

Using the Herfindahl-Hirschman Index (HHI) as your test, the point change between the pre-merger HHI and the post merger HHI is:



    1. 50 points

    2. 100 points

    3. 200 points

    4. 350 points

Answer = c: 200 points. The pre-merger and post-merger HHI are calculated below:

Dystan 10% x 10% = 100 Dystan / Systel 20% x 20% = 400


Fabco 20% x 20% = 400 Fabco 20% x 20% = 400
Lytmar 30% x 30% = 900 Lytmar 30% x 30% = 900
Systel 10% x 10% = 100
United 10% x 10% = 100 United 10% x 10% = 100
Zabor 10% x 10% = 100 Zabor 10% x 10% = 100
Pre Merger HHI = 1,700 Post Merger HHI = 1,900

The difference between the pre-merger HHI and the post merger HHI is 200 (1,900 – 1,700)





  1. On March 3, 1998, Miser Steel made a tender offer to acquire Reliance Steel. Miser's tender offer is set to expire on March 23, 1998. On March 21, 1998, another company called Ohio Steel made a tender offer to acquire Reliance Steel. Based on consideration of Ohio Steel's tender offer, the closing date for Miser Steel's tender offer is:

        1. March 21, 1998

        2. March 23, 1998

        3. March 25, 1998

        4. March 31, 1998

Answer = d: The closing date gets extended 10 days from the date of the last offer which is March 21, 1998 + 10 days = March 31, 1998.

  1. Due diligence requires the collection of a lot of information. Which of the following information types would be least important for due diligence to work properly?

        1. Employment Records of Target Company

        2. Property Records of Competing Companies

        3. Financial Records of Target Company

        4. Property Records of Target Company


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