An Investor Is Analyzing Two Firms in the Same Industry

question 162

Multiple Choice

An investor is analyzing two firms in the same industry. She is looking for long term performance from her investment. Both firms are basically identical except one firm is involved in substantial downsizing and the other firm is undertaking aggressive downscoping. The investor should invest in the

• A) downscoping firm because the higher debt load will discipline managers to act in shareholders' best interests.
• B) downscoping firm because it will be focusing on the firm's core businesses.
• C) downsizing firm because it will be making decisions based on tactical strategies.
• D) downsizing firm because it is eliminating employees who are essentially "dead weight" and are dragging down the firm's profitability.

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Definitions:

Back Button

A navigation element in user interfaces that allows users to return to the previous page or state.

Left Arrow

A graphical symbol or icon used in interfaces to indicate the action of going back, returning to a previous screen, or navigating left.

Previous Record

A term used in database navigation to refer to the action of moving backward in a dataset to view or edit the information of the record that immediately precedes the current record.

Navigation Bar

A user interface component that provides users with links or buttons to navigate through the various sections of a website or application.