Other Merchant Banking Activities-Mergers, Acquisitions & Takeovers
20 questions. Each answer is explained.
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Learn these topics
More units in NISM Series IX
- Introduction to Capital Market15
- Introduction to the Merchant Banking20
- Registration, Code of Conduct & General Obligations of Merchant Bankers in India20
- Issue Management – Important Terms15
- Issue Management – Process and Underwriting25
- Issue Management – General Obligations of Merchant Bankers and Due Diligence20
- Other Merchant Banking Activities – Disinvestment, Buyback of Equity Shares15
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series IX Merchant Banking
Exam rules read on NISM's site on 17 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 17 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 20 questions on Other Merchant Banking Activities-Mergers, Acquisitions & Takeovers, with answers
Q1Two competing manufacturers of the same product combine their businesses. What type of merger is this?
Option A. A horizontal merger — Correct answer
Option B. A vertical merger
Why it is wrong: A vertical merger joins different supply-chain stages rather than direct competitors at the same stage.
Option C. A conglomerate merger
Why it is wrong: A conglomerate merger combines unrelated businesses rather than the competing manufacturers described.
Option D. A management buyout
Why it is wrong: A management buyout concerns acquisition by managers rather than combination of two competing manufacturers.
Answer: A. This is a horizontal merger because the businesses compete at the same stage of the same product market. Remember: Horizontal mergers combine businesses operating at the same market stage.
Hint, shown before you answer in practice mode: Common mistake: Calling every business combination vertical regardless of the parties’ relationship. Compare the businesses’ positions within the same market.
IX-116easyconceptual
Q2A manufacturer acquires its raw-material supplier. What business-combination relationship does this most directly illustrate?
Option A. Horizontal integration
Why it is wrong: Horizontal integration combines businesses at the same market stage rather than a manufacturer and supplier.
Option B. Vertical integration — Correct answer
Option C. Unrelated diversification
Why it is wrong: The stated businesses are directly connected through the production chain.
Option D. A minority financial investment without integration
Why it is wrong: The case describes acquiring the supplier rather than a passive minority investment.
Answer: B. The transaction illustrates vertical integration because it combines businesses at different stages of the same supply chain. Remember: Vertical integration links different stages of production or distribution.
Hint, shown before you answer in practice mode: Common mistake: Classifying the deal only by the fact that both companies operate in the same broad industry. Identify whether the acquired business operates before or after the buyer in the supply chain.
IX-117easyconceptual
Q3Can acquiring control of a listed target trigger an open offer even without crossing the shareholding threshold, assuming no exemption?
Option A. Yes, but only if every shareholder consents
Why it is wrong: Shareholder unanimity is not the condition defining the control-acquisition trigger.
Option B. No, control matters only in an unlisted company
Why it is wrong: The open-offer framework concerns listed target companies.
Option C. No, only the share percentage matters
Why it is wrong: Regulation 4 provides an independent trigger for acquiring control.
Option D. Yes, control acquisition is a separate trigger — Correct answer
Answer: D. Yes, acquiring control is a separate open-offer trigger under Regulation 4, subject to applicable exemptions. Remember: Control and shareholding thresholds must be assessed separately.
Hint, shown before you answer in practice mode: Common mistake: Assuming a low percentage holding automatically rules out an open-offer obligation. Check whether the takeover rules have more than one kind of trigger.
IX-118easyregulatory
Q4What most directly characterises persons acting in concert in a takeover context?
Option A. Purchase on the same day without coordination
Why it is wrong: Coinciding purchase dates alone do not establish concerted action.
Option B. Use of the same stock broker without an acquisition understanding
Why it is wrong: A shared broker alone does not establish the required common purpose and cooperation.
Option C. Cooperation toward a common acquisition or control objective — Correct answer
Option D. Independent purchases without a shared acquisition objective
Why it is wrong: Independent action without the common objective does not meet the stated definition.
Answer: C. Persons acting in concert cooperate toward a common acquisition or control objective under an agreement or understanding, which may be formal or informal. Remember: Concerted action concerns a shared acquisition objective and cooperation, not superficial similarities.
Hint, shown before you answer in practice mode: Common mistake: Looking only for a written agreement and ignoring an informal understanding. Think about the relationship between purpose and coordinated action.
IX-119easyregulatory
Q5What minimum offer size generally applies to a mandatory open offer under Regulations 3 and 4?
Option A. 51% of the target’s total shares on the prescribed basis
Why it is wrong: 51% is not the minimum mandatory offer size specified by Regulation 7(1).
Option B. 26% of the target’s total shares on the prescribed basis — Correct answer
Option C. 10% of the target’s total shares on the prescribed basis
Why it is wrong: 10% is not the general minimum size for a mandatory offer under Regulations 3 and 4.
Option D. 25% of the target’s total shares on the prescribed basis
Why it is wrong: 25% is associated with a shareholding trigger rather than the minimum mandatory offer size.
Answer: B. The mandatory offer must cover at least 26% of the target’s total shares on the basis prescribed by Regulation 7(1). That basis uses total shares as of the tenth working day after tendering closes and accounts for the potential increases required by the rule. Remember: The mandatory offer size and the acquisition trigger are different percentages.
Hint, shown before you answer in practice mode: Common mistake: Using the 25% acquisition threshold as the required open-offer size. Do not confuse the trigger percentage with the size of the resulting offer.
IX-120easyregulatory
Q6A target’s board supports a negotiated acquisition after reviewing its terms. How is the takeover generally described?
Option A. A hostile takeover
Why it is wrong: A hostile takeover lacks the target board’s support described in this case.
Option B. A compulsory delisting
Why it is wrong: A negotiated supported acquisition does not by itself amount to compulsory removal from listing.
Option C. A management buyout
Why it is wrong: The case identifies board support rather than managers becoming the acquiring owners.
Option D. A friendly takeover — Correct answer
Answer: D. The acquisition is generally described as friendly because the target’s board supports the negotiated transaction. Remember: Friendly and hostile describe the target side’s stance toward a takeover.
Hint, shown before you answer in practice mode: Common mistake: Assuming the method of payment alone determines whether a takeover is friendly. Focus on the target management’s response to the acquisition proposal.
IX-121mediumapplication
Q7A buyer purchases all shares of a company that has outstanding loans. What happens to those loans solely because the shares change hands?
Option A. They automatically disappear at completion
Why it is wrong: A share transfer does not by itself extinguish the company’s debts.
Option B. They remain obligations of the company — Correct answer
Option C. They automatically become dividends payable
Why it is wrong: Borrowing does not turn into a dividend because shareholders change.
Option D. They automatically become the seller’s personal loans
Why it is wrong: A share sale does not by itself transfer company debt into the seller’s personal name.
Answer: B. The loans remain company obligations because changing share ownership does not by itself cancel or transfer the company’s debts. Remember: A share acquisition changes ownership without automatically extinguishing corporate liabilities.
Hint, shown before you answer in practice mode: Common mistake: Treating a sale of shares as though the company’s debts are erased. Distinguish the company’s legal obligations from the identity of its shareholders.
IX-122mediumapplication
Q8Two businesses have standalone values of ₹120 crore and ₹80 crore. Their combined value is ₹230 crore before transaction costs. What is the synergy value?
Option A. ₹40 crore
Why it is wrong: This is the difference between the standalone values rather than the synergy.
Option B. ₹230 crore
Why it is wrong: This is the combined value rather than the value added by combining the businesses.
Option C. ₹110 crore
Why it is wrong: This deducts only one standalone business from the combined value.
Option D. ₹30 crore — Correct answer
Answer: D. The synergy value is ₹30 crore because the combination exceeds the sum of standalone values by that amount. Synergy = ₹230 crore − ₹120 crore − ₹80 crore = ₹30 crore. Remember: Synergy is incremental combination value rather than the entire combined value.
Hint, shown before you answer in practice mode: Common mistake: Ignoring one standalone business when calculating value created by the merger. Compare the combined value with what the two businesses were worth separately.
IX-123mediumnumerical
Q9A merger offers three acquiring-company shares for every two target-company shares. How many new shares does a holder of 400 target shares receive?
Option A. 400 shares
Why it is wrong: This assumes a one-for-one exchange instead of the stated ratio.
Option B. 600 shares — Correct answer
Option C. 200 shares
Why it is wrong: This counts pairs of target shares but omits the three shares issued for each pair.
Option D. 800 shares
Why it is wrong: This doubles the holding rather than applying the three-for-two ratio.
Answer: B. The holder receives 600 acquiring-company shares under the stated exchange ratio. Groups = 400 ÷ 2 = 200. New shares = 200 × 3 = 600. Remember: Share-swap consideration depends on the direction of the exchange ratio.
Hint, shown before you answer in practice mode: Common mistake: Reversing target shares surrendered and acquiring-company shares received. Count the complete groups of target shares and apply the exchange terms.
IX-124mediumnumerical
Q10An acquirer and its concert parties hold 23% in a main-board listed target and agree to acquire another 3%. Assuming no exemption, what threshold result follows?
Option A. No trigger until the combined holding exceeds 50%
Why it is wrong: The initial shareholding trigger is not postponed until majority ownership.
Option B. No trigger because only direct holdings count
Why it is wrong: The acquirer’s holdings are assessed together with those of concert parties.
Option C. No trigger because the new purchase is below 5%
Why it is wrong: The 5% incremental rule does not replace the initial 25% threshold.
Option D. The 25% open-offer trigger is crossed — Correct answer
Answer: D. The group would reach 26%, crossing the 25% trigger under Regulation 3(1), so an open-offer obligation arises absent an exemption. Remember: The initial takeover threshold includes the acquirer and persons acting in concert.
Hint, shown before you answer in practice mode: Common mistake: Applying the incremental-acquisition rule before checking the initial threshold. Use the group’s total voting entitlement after the proposed acquisition.
IX-125mediumapplication
Q11A group starts the financial year at 30% and acquires exactly 5% more. There is no control change or other trigger. Does Regulation 3(2) alone require an open offer?
Option A. Yes, any purchase by a 30% holder triggers it
Why it is wrong: Regulation 3(2) does not make every additional purchase an open-offer trigger.
Option B. No, because the threshold is always 10% per year
Why it is wrong: The stated general annual threshold is not 10%.
Option C. No, it requires acquisition of more than 5% — Correct answer
Option D. Yes, exactly 5% is more than the permitted amount
Why it is wrong: The wording is more than 5%, not 5% or more.
Answer: C. No, exactly 5% does not trigger Regulation 3(2) alone because that provision uses more than 5%, assuming the group remains below the maximum permissible non-public shareholding. Remember: The strict greater-than wording matters when testing the annual acquisition threshold.
Hint, shown before you answer in practice mode: Common mistake: Reading more than 5% as 5% or more. Pay close attention to the difference between more than and at least.
IX-126mediumapplication
Q12Starting at 30%, a group buys 4%, sells 3% and buys 3% in one financial year. No exemption applies. What does the annual acquisition test count?
Option A. 7% gross acquisitions, which exceeds 5% — Correct answer
Option B. 3% from only the latest purchase
Why it is wrong: The test covers the financial year’s acquisitions rather than only the final purchase.
Option C. 4% net growth, which avoids the trigger
Why it is wrong: The test counts gross acquisitions rather than offsetting intervening sales.
Option D. 1% after subtracting the sale twice
Why it is wrong: The rule does not allow sales to be repeatedly deducted from acquisitions.
Answer: A. The test counts 7% gross acquisitions because intervening sales do not offset acquisitions for Regulation 3(2). Remember: Selling shares during the year does not reset the gross-acquisition test.
Hint, shown before you answer in practice mode: Common mistake: Using only the net change in holdings to test the annual takeover threshold. Check whether selling shares resets the annual acquisition allowance.
IX-127mediumapplication
Q13Which person may be appointed manager to an open offer under Regulation 12(1)?
Option A. A registered merchant banker that is the acquirer’s associate
Why it is wrong: Registration alone does not overcome the non-association condition.
Option B. A registered merchant banker that is not the acquirer’s associate — Correct answer
Option C. An independent auditor without merchant-banker registration
Why it is wrong: Independence alone does not replace the required merchant-banker registration.
Option D. An independent broker without merchant-banker registration
Why it is wrong: Stock-broker registration does not substitute for merchant-banker registration in this role.
Answer: B. The manager must be a SEBI-registered merchant banker that is not an associate of the acquirer. Remember: The open-offer manager must meet both registration and non-association requirements.
Hint, shown before you answer in practice mode: Common mistake: Checking professional registration while overlooking the independence requirement. Think about potential conflicts between the offer manager and the acquirer.
IX-128mediumregulatory
Q14Why is an escrow account required in the open-offer process under Regulation 17?
Option A. To secure performance of the acquirer’s obligations — Correct answer
Option B. To prepay the target’s ordinary dividend obligations
Why it is wrong: The escrow is for the acquisition offer rather than the target’s ordinary dividend programme.
Option C. To guarantee the target’s future market price
Why it is wrong: The escrow does not insure the trading price after the acquisition.
Option D. To provide unrestricted working capital to the acquirer
Why it is wrong: The escrow supports offer performance rather than unrestricted operating expenditure.
Answer: A. The escrow account secures performance of the acquirer’s obligations under the open-offer framework. Remember: Open-offer escrow is a performance safeguard rather than freely usable investment capital.
Hint, shown before you answer in practice mode: Common mistake: Treating escrow money as unrestricted funds available for any corporate purpose. Connect the restricted funds with the commitments made to accepting shareholders.
IX-129mediumconceptual
Q15A mandatory open offer uses a regulatory share base of 2 crore shares. At the minimum offer size and ₹100 per share, what consideration is required?
Option A. ₹26 crore
Why it is wrong: This effectively applies the percentage to only 1 crore shares.
Option B. ₹200 crore
Why it is wrong: This assumes the offer must cover the entire share base.
Option C. ₹52 crore — Correct answer
Option D. ₹50 crore
Why it is wrong: This uses 25% instead of the 26% minimum mandatory offer size.
Answer: C. The consideration is ₹52 crore at the minimum 26% offer size. Shares = 2 crore × 26% = 52 lakh. Consideration = 52 lakh × ₹100 = ₹52 crore, assuming no changes to the given regulatory share base. Remember: Open-offer consideration depends on both the applicable offer quantity and the offer price.
Hint, shown before you answer in practice mode: Common mistake: Confusing the initial acquisition threshold with the required offer quantity. Apply the mandatory offer-size percentage before multiplying by the offer price.
IX-130mediumnumerical
Q16All 52-week purchases were 10,000 shares at ₹180 forty weeks ago, 40,000 at ₹220 thirty-five weeks ago and 10,000 at ₹200 ten weeks ago. The negotiated price is ₹205 and the 60-trading-day weighted average is ₹202. For a standard direct acquisition of frequently traded shares, what minimum offer price follows, rounded to two decimals?
Option A. ₹205.00
Why it is wrong: The negotiated price is below the applicable fifty-two-week weighted average.
Option B. ₹220.00
Why it is wrong: This uses a thirty-five-week-old highest price as though it fell inside the twenty-six-week highest-price window.
Option C. ₹202.00
Why it is wrong: The market weighted average is below other applicable pricing parameters.
Option D. ₹210.00 — Correct answer
Answer: D. The minimum offer price is ₹210.00 because the fifty-two-week weighted average is the highest applicable benchmark. Purchase value = 10,000 × ₹180 + 40,000 × ₹220 + 10,000 × ₹200 = ₹1,26,00,000. Weighted average = ₹1,26,00,000 ÷ 60,000 = ₹210. The highest purchase price within twenty-six weeks is ₹200. Comparing ₹210, negotiated ₹205, twenty-six-week highest ₹200 and market weighted average ₹202 gives ₹210.00 to two decimals, assuming no other applicable adjustment or later acquisition. Remember: The highest historical purchase and the weighted-average benchmark use different lookback windows.
Hint, shown before you answer in practice mode: Common mistake: Using the highest price from all fifty-two weeks as the twenty-six-week highest-price benchmark. Use the correct observation window for each benchmark, then compare the applicable results.
IX-131hardnumerical
Q17For a standard unconditional direct-acquisition open offer of ₹800 crore, what minimum escrow amount follows the scale in Regulation 17(1)?
Option A. ₹200 crore
Why it is wrong: This applies 25% to the entire consideration rather than using the second tier.
Option B. ₹155 crore — Correct answer
Option C. ₹125 crore
Why it is wrong: This covers the first ₹500 crore but omits escrow on the balance.
Option D. ₹80 crore
Why it is wrong: This applies 10% to the entire consideration and ignores the higher first tier.
Answer: B. The minimum escrow is ₹155 crore under the standard scale. First ₹500 crore × 25% = ₹125 crore. Remaining ₹300 crore × 10% = ₹30 crore. Total = ₹155 crore. The case excludes conditional and special indirect-acquisition requirements. Remember: The ordinary open-offer escrow scale applies different rates to different portions of consideration.
Hint, shown before you answer in practice mode: Common mistake: Applying a single rate to the entire offer when the rule uses tiers. Separate the consideration into the first tier and the remaining balance.
IX-132hardnumerical
Q18An acquirer owns 24 lakh of a main-board target’s 100 lakh shares and receives all 4 lakh newly issued shares. What holding results, and is 25% crossed?
Option A. 26.92%, so the 25% threshold is crossed — Correct answer
Option B. 23.08%, so the threshold is not crossed
Why it is wrong: This enlarges the denominator but omits the newly allotted shares from the acquirer’s holding.
Option C. 28.00%, so the old denominator remains appropriate
Why it is wrong: Fresh issuance increases the denominator, so 100 lakh is no longer the total.
Option D. 25.00%, so the threshold is merely approached
Why it is wrong: The stated share counts produce more than 25%, not exactly 25%.
Answer: A. The acquirer reaches 26.92%, crossing the 25% threshold absent an exemption. New holding = 24 lakh + 4 lakh = 28 lakh. Enlarged shares = 100 lakh + 4 lakh = 104 lakh. Holding = 28 ÷ 104 × 100 = 26.92%. The shareholding calculation does not postpone any earlier announcement obligation. Remember: Acquisition through new issuance requires an enlarged-denominator calculation.
Hint, shown before you answer in practice mode: Common mistake: Updating the acquirer’s shares while leaving the company’s total shares unchanged. Update both the acquirer’s holding and the company’s outstanding shares.
IX-133hardnumerical
Q19An acquirer earns ₹40 crore on 2 crore shares. A target adds ₹12 crore profit, and the merger issues 0.5 crore shares. What is post-merger earnings per share?
Option A. ₹26.00
Why it is wrong: This adds target earnings but ignores the new shares issued in the merger.
Option B. ₹20.00
Why it is wrong: This repeats the acquirer’s old earnings per share without recomputing the combined figure.
Option C. ₹20.80 — Correct answer
Option D. ₹16.00
Why it is wrong: This enlarges the share count but omits target earnings.
Answer: C. Post-merger earnings per share are ₹20.80 when the stated profits apply for the same full period with no other effects. Combined earnings = ₹40 crore + ₹12 crore = ₹52 crore. Combined shares = 2 crore + 0.5 crore = 2.5 crore. Earnings per share = ₹52 crore ÷ 2.5 crore = ₹20.80. Remember: A merger’s earnings-per-share calculation must include both added earnings and issued shares.
Hint, shown before you answer in practice mode: Common mistake: Adding the target’s profit without recognising share-swap dilution. Update earnings and shares consistently for the same post-merger period.
IX-134hardnumerical
Q20Standalone equity values are ₹200 crore for the buyer and ₹80 crore for the target. Combined equity value before costs is ₹310 crore. With ₹95 crore paid for the target and ₹5 crore transaction costs, what net value does the buyer gain?
Option A. ₹10 crore — Correct answer
Option B. ₹30 crore
Why it is wrong: This is gross synergy before deducting the acquisition premium and transaction costs.
Option C. ₹25 crore
Why it is wrong: This deducts costs from gross synergy but ignores the premium paid for the target.
Option D. ₹15 crore
Why it is wrong: This deducts the premium but omits the ₹5 crore costs.
Answer: A. The buyer gains ₹10 crore after paying the premium and costs. Gross synergy = ₹310 crore − ₹200 crore − ₹80 crore = ₹30 crore. Premium = ₹95 crore − ₹80 crore = ₹15 crore. Net gain = ₹30 crore − ₹15 crore − ₹5 crore = ₹10 crore. Remember: Acquisition value retained by the buyer is reduced by the premium and transaction costs.
Hint, shown before you answer in practice mode: Common mistake: Calling all merger synergy a gain to the buyer without considering what it pays. Value created is not the same as value retained after the price paid and transaction costs.
IX-135hardnumerical
Other Merchant Banking Activities-Mergers, Acquisitions & Takeovers: common questions
How many practice questions are there on Other Merchant Banking Activities-Mergers, Acquisitions & Takeovers?
20 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 8 practice topics for NISM Series IX, which has 150 questions in total.
Are these real NISM Series IX questions on Other Merchant Banking Activities-Mergers, Acquisitions & Takeovers?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
Does negative marking apply to NISM Series IX?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Other Merchant Banking Activities – Disinvestment, Buyback of Equity Shares
15 questions on Other Merchant Banking Activities – Disinvestment, Buyback of Equity Shares. Its quiz opens on that unit.
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