The Three Tests for Judging Whether a Particular Diversification Move

question 54

Multiple Choice

The three tests for judging whether a particular diversification move can create value for shareholders are the

• A)attractiveness test, the profitability test, and the shareholder value test.
• B)strategic fit test, the competitive advantage test, and the return-on-investment test.
• C)resource fit test, the profitability test, and the shareholder value test.
• D)attractiveness test, the cost of entry test, and the better-off test.
• E)shareholder value test, the cost of entry test, and the profitability test.

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Definitions:

Squared Deviation

The squared differences between each observation and the mean, used as part of the calculation for variance.

Variance

A measure of the dispersion representing the average of the squared differences from the Mean.

Score

A numerical or categorical representation of a performance, achievement, or the outcome of an assessment.

Mean

The arithmetic average of a set of values, calculated by dividing the sum of the values by the number of values.