### What does the Blended Value represent in a self-tender offer? - [ ] The highest price paid for any share. - [x] The average value of tendered and residual stocks. - [ ] The lowest price paid for any share. - [ ] The immediate post-offer market price. > **Explanation:** Blended Value represents the average value of both the tendered stock sold back to the company and the residual stock that remains with shareholders. ### Why might a company conduct a self-tender offer? - [x] To reduce the number of outstanding shares. - [ ] To quickly dilute shareholder ownership. - [ ] To distribute additional dividends. - [ ] To prepare for an acquisition. > **Explanation:** A self-tender offer is often conducted to reduce the number of outstanding shares, which can potentially increase the value of the remaining shares and improve financial ratios. ### What is typically affected by the tendered stock price in a self-tender offer? - [ ] The day trading volume. - [x] The Blended Value. - [ ] The stockbroker fees. - [ ] The mutual fund returns. > **Explanation:** The price of the tendered stock is a critical part of the calculation of the Blended Value, which considers both the buyback price and the price of residual shares. ### How can a self-tender offer impact a company's financials? - [ ] Increase the number of shares outstanding. - [ ] Raise dividends without additional earnings. - [x] Reduce the cash reserves due to share repurchase. - [ ] Increase the public float. > **Explanation:** A self-tender offer typically reduces a company's cash reserves because of the expenditure required to buy back the shares. ### Which type of stock remains post self-tender offer? - [ ] Tendered stock. - [x] Residual stock. - [ ] Repurchased stock. - [ ] Issued stock. > **Explanation:** Residual stock refers to the shares that remain with shareholders after a portion has been repurchased by the company during a self-tender offer. ### What is a main consequence of reduced numbers of outstanding shares on financial metrics? - [ ] Greater share dilution. - [x] Increased Earnings Per Share (EPS). - [ ] Decreased P/E ratio. - [ ] Lowered stockholders' equity. > **Explanation:** When the number of outstanding shares is reduced through a buyback, EPS may increase because there are fewer shares among which to distribute the earnings. ### Which formula would be used to calculate Blended Value? - [ ] \\[\frac{\text{Total Cost of Shares}}{\text{Number of Tendered Shares}}\\] - [x] \\[\frac{\text{(Tendered Shares * Tender Price) + (Residual Shares * Market Price)}}{\text{Total Shares}}\\] - [ ] \\[\frac{\text{Residual Shares}}{\text{Tendered Shares}}\\] - [ ] \\[\frac{\text{(Tender Price - Market Price) * Total Shares}}{\text{Total Cost of Shares}}\\] > **Explanation:** The Blended Value is calculated as the total cost of both tendered and residual shares divided by the total number of shares. ### Who decides on a self-tender offer? - [ ] Individual shareholders. - [x] The company's board of directors. - [ ] Stock exchange authorities. - [ ] Market analysts. > **Explanation:** The company's board of directors typically decides and approves a self-tender offer as part of corporate strategy. ### When calculating the Blended Value, why must both tendered and residual stock prices be considered? - [ ] To calculate the dividends accurately. - [ ] To lower stockholder expectations. - [ ] To encourage day trading. - [x] To give a complete valuation picture reflecting market and offer prices. > **Explanation:** Including both tendered and residual stock prices provides a complete valuation picture that reflects market conditions and the specifics of the buyback offer. ### Can the Blended Value method be used outside of self-tender offers? - [x] Yes, in other types of corporate buybacks. - [ ] No, it is exclusive to self-tender offers. - [ ] Only in hostile takeovers. - [ ] Only during bankruptcy proceedings. > **Explanation:** While Blended Value is commonly used in self-tender offers, the concept can also apply to other types of corporate buybacks to evaluate the average valuation effect.