Series 79: Chapter 12 Practice Questions

Chapter 12 Practice Questions

1. 1. A fairness opinion in a merger or acquisition is best described as:
2. A. A formal recommendation of approval or disapproval of the proposed transaction rendered by a target company’s board of directors
3. B. An evaluation rendered by an investment banker as to whether the proposed transaction is the best deal available under then-current circumstances
4. C. An opinion by legal counsel as to whether the proposed transaction meets all applicable legal and regulatory requirements
5. D. An opinion rendered by a third party as to whether a proposed transaction is fair from a financial perspective
6. 2. In what sequence do the following events associated with drafting a fairness opinion typically occur?
7. I. Presentation to customer board of directors or board committee
8. II. Evaluation of the proposed deal
9. III. Meetings of internal fairness opinion committee or committees
10. IV. The company directyors sign off on the fairness opinion
11. A. I, II, III, IV
12. B. II, IV, III, I
13. C. II, III, I, IV
14. D. III, II, I, IV
15. 3. FINRA rules require a member that issues a fairness opinion to do all of the following except:
16. A. Disclose whether the member has served as a financial advisor to any party to the transaction that is the subject of the fairness opinion
17. B. Require an internal fairness committee of the member to approve the opinion before the opinion is issued
18. C. Have written procedures in place for the member to approve or disapprove the fairness opinion
19. D. Disclose whether the member will receive any compensation contingent on the successful completion of the transaction that is the subject of the fairness op