The Three Tests for Judging Whether a Particular Diversification Move

question 36

Multiple Choice

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

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

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Definitions:

Result

The consequence or effect obtained after performing a specific action or series of actions.

Original Amount

The initial sum of money before any changes, such as appreciation, depreciation, or interest, have been applied.

Final Value

The value of an investment or loan after the application of interest or other financial changes.

Simplify

To alter a complex equation or expression into a simpler form that retains the original meaning or value.