With a Strategy of Unrelated Diversification, an Acquisition Is Deemed

question 59

Multiple Choice

With a strategy of unrelated diversification, an acquisition is deemed to have potential if it

• A)can achieve at least existing profit margins into the near future.
• B)has the opportunity to generate positive buzz in the industry, even if it may not be able to contribute to the parent firm's bottom line.
• C)can pass the industry attractiveness test and the cost of entry test, and if it has good prospects for profit growth.
• D)can pass at least the industry attractiveness test if not the cost of entry test.
• E)can add economic value for managers.

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Definitions:

Normal Model

A bell-shaped probability distribution characterized by its mean and standard deviation, often used to describe naturally occurring phenomena.

Middle 95%

Refers to the central portion of a distribution that contains 95% of the data, often used in the context of confidence intervals indicating where the true population parameter lies with a certain level of confidence.

Normal Model

A distribution of probability that exhibits symmetry around the mean, demonstrating that data points close to the mean occur more frequently than those far from it.

Volumes

Quantities of three-dimensional space enclosed within a boundary or the contents within a container, measured in cubic units.