September 2008q(v)

Discussion in 'SA5' started by Edwin, Apr 21, 2015.

  1. Edwin

    Edwin Member

    The examiners report picks a side and insists that the M&A market will shrink, which I agree with since the default may spread across global economy and constrain liquidity and reduce credit prospects.

    However, I don't think this is the only thing that may happen some companies will definitely have resources and they may offer to buyout the defaulted firm - recall that a number of companies e.g Barclays Bank had expressed interest in buying Lehman Brothers - competitive bids

    Also, since Liquidity will be restrained and hence leverage prospects slim, it may result in Pre-announced bids some through the use of Derivatives (this is trending in Australia), then when the economy recovers the Options are exercised

    Do you earn marks for points not in the Examiners' solution?
     
    Last edited by a moderator: Apr 28, 2015

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