Explain the Relevance of the Following as They Relate to Building

question 19

Essay

Explain the relevance of the following as they relate to building shareholder value via diversification.
a. the industry attractiveness test
b. the cost of entry test
c. the better-off test

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Definitions:

Last Paid a Dividend

The most recent instance when a company distributed a portion of its earnings to shareholders in the form of dividends.

Required Rate of Return

The required rate of return is the minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.

Expected to Grow

Typically refers to a business or investment that is anticipated to increase in size, value, or income over time.

Most You Should Pay

The maximum price at which it's considered reasonable to purchase an asset or service based on its expected future returns.