Firms Often Bundle Up a Group of Assets and Then

question 36

Multiple Choice

Firms often bundle up a group of assets and then sell the cash flows from these assets in the form of securities. They are called

• A)debentures.
• B)subordinated issues.
• C)asset-backed securities.
• D)mortgage bonds.

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Definitions:

Outstanding Stock

The total number of shares of a corporation that have been issued and are currently owned by investors, including restricted shares.

Market Value

The current economic value at which transactions for assets or services are conducted in a marketplace.

Synergy Value

The additional value created by combining two or more assets or businesses, which is greater than the sum of their separate values.

Merger Premium

The additional amount an acquiring company pays over the market value of the shares to purchase another company.