Equity Swaps Can Be Used for All of the Following

question 26

Multiple Choice

Equity swaps can be used for all of the following except:

• A)to synthetically buy stock
• B)to synthetically sell stock
• C)to convert dividends into capital gains
• D)to synthetically re-align an equity portfolio
• E)none of the above

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Definitions:

Acquisition Method

An accounting approach used to consolidate the financial statements of two companies when one company acquires control over the other.

Purchase Method

An accounting method used in mergers and acquisitions where the assets and liabilities of the acquired company are added to the acquirer's balance sheet at their fair market values.

Business Combination

A transaction or event in which an acquirer obtains control of one or more businesses, often involving mergers, acquisitions, or consolidations.

Pooling-of-interests Method

A merger accounting method in which the assets and liabilities of merging companies are combined using book values, rather than the purchase method.