CAIIB · Advanced Business & Financial Management · Module C — Valuation, Mergers & Acquisitions
CAIIB ABFM Unit 17 — Merger, Acquisition & Restructuring: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper III of the December 2026 cycle (Sunday 13 December 2026)
This is the free practice page for CAIIB ABFM Unit 17 — Merger, Acquisition & Restructuring (Module C — Valuation, Mergers & Acquisitions). The CAIIB Mock Centre holds 171 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five practice questions with explanations, and the traps that cost marks.
ABFM · Module C171 MCQs in the Mock Centre5 free belowPaper on 13 December
Key facts examiners test from this unit
Restructuring and types of transactions — restructuring changes assets, finance or ownership; mergers combine firms, divestitures shrink them.
Reasons for mergers — real synergies justify mergers; diversification, cheaper debt and EPS growth usually do not.
Costs, benefits, exchange ratios and valuing a purchase — cash cost ignores the gains, stock cost shares them; swap ratio = target value ÷ acquirer value.
Changed since the textbook
Takeover Regulations: independent registered valuer for open offer prices of infrequently traded shares (3 December 2025). The SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2025, notified on 3 December 2025 and effective 30 days after publication, replace valuation by the acquirer and the manager to the open offer with valuation by an independent registered valuer (as defined with reference to section 247 of the Companies Act, 2013) where the offer price cannot be set from market prices, as for infrequently traded shares and some indirect acquisitions. SEBI may also require an independent valuation at the acquirer's cost. Source: TeamLease RegTech
Fast-track mergers widened under section 233 (4 September 2025). The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025, notified and in force on 4 September 2025, extend the fast-track merger route under section 233 of the Companies Act, 2013 to (i) two or more unlisted companies (other than section 8 companies) whose outstanding loans, debentures and deposits do not exceed ₹200 crore each, with no default in repayment; (ii) a holding company and its subsidiary, not necessarily wholly owned, where the transferor is unlisted; and (iii) two subsidiaries of the same holding company where the transferor is unlisted. Source: iPleaders
5 free practice questions — tap an option
Five practice questions from this unit. Answers lock on the first tap, exactly as in the exam, and an explanation opens underneath. The Mock Centre has all 171 questions on this unit, from easy to tough, with caselets and key-in numericals, why every other option is wrong and the exam tip — and tracks your score and revision dates.
Question 1 of 5
After an amalgamation is sanctioned, a creditor of the transferor company asks what has become of its claim. What is the position?
Why (c): In an amalgamation the rights and liabilities of the transferor vest in the transferee company, as the court held in the Inland Steam Navigation Workers Union case, so the creditor's claim continues against the transferee. Dissolution of the transferor does not extinguish its debts, and the claim does not depend on how the creditor voted. (a) is wrong: Dissolution of the transferor does not extinguish its debts. (b) is wrong: The claim passes to the transferee; no cash payment is required first. (d) is wrong: The claim does not depend on how the creditor voted.
Question 2 of 5
An acquirer buys 60% of a listed company's shares from its promoters and in the market. The company continues to exist with its own assets and liabilities. What is this transaction?
Why (c): A takeover buys a controlling interest in the target's equity, so its assets and liabilities stay with it and it continues to exist; in a merger the target's assets and liabilities pass to another company. A slump sale transfers an undertaking for a lump sum, and a demerger splits a business off into a separate company. (a) is wrong: In a merger the target's assets and liabilities pass to another company. (b) is wrong: A slump sale transfers an undertaking for a lump sum. (d) is wrong: A demerger splits a business into a separate company.
Question 3 of 5
From when do the assets and liabilities of the transferor pass to the merged company?
Why (d): After the NCLT orders, the merged business takes on all the assets and liabilities of the transferor as of the appointed date. (a) is wrong: Informing the exchanges is an early step. (b) is wrong: A board meeting does not transfer assets. (c) is wrong: Listing comes after the transfer.
Question 4 of 5
During an open offer for a listed company, its board proposes four actions. Which one needs the shareholders' approval first?
Why (a): During the offer period the target's board may not, without the shareholders' approval, dispose of material assets, issue capital, enter into material contracts or make similar changes that could frustrate the offer. Routine business such as publishing results or repaying a loan when due continues, and a committee of independent directors is expected to give a reasoned recommendation on the offer. (b) is wrong: Repaying a loan when due is routine business. (c) is wrong: Results must still be published. (d) is wrong: Independent directors are expected to recommend on the offer.
Question 5 of 5
A target responds to a hostile bid by making its own bid for the shares of the bidding company. Which defence is this?
Why (c): In the Pac-Man defence the targeted company makes a counter-bid for the stock of the company bidding for it. (a) is wrong: A golden parachute rewards managers. (b) is wrong: Selling the crown jewels makes the target less attractive. (d) is wrong: A super-majority clause raises the vote needed for a merger.
0 of 5 answered.
Traps in this unit
A carve-out sells shares; a demerger gives them to existing holders.
EPS growth is not value.
Investors diversify more cheaply themselves.
Practise all 171 questions on Unit 17. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the ABFM Online Mock Centre unlocks all 4,000+ ABFM questions, the full-length papers with caselets and key-ins, module mocks and Smart Revision for 18 months (₹1,499).
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