The Better-Off Test for Evaluating Whether a Particular Diversification Move

question 100

Multiple Choice

The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves assessing whether the diversification move

• A)will make the company better off because it will produce a greater number of core competencies.
• B)will make the company better off by improving its balance sheet strength and credit rating.
• C)will make the company better off by spreading shareholder risks across a greater number of businesses and industries.
• D)offers potential for the company's existing businesses and new businesses to perform better together under a single corporate umbrella.
• E)will benefit shareholders due to gains in earnings per share and faster stock price appreciation.

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Definitions:

Acid Released

The discharge or secretion of acidic substances, often in the context of biological and chemical processes.

Absorption

The process by which one substance takes up or makes part of itself another substance.

Nutrient Molecules

The basic components of food that are necessary for growth, metabolism, and the body's functions, such as proteins, vitamins, and minerals.

Blood Clot

A semi-solid mass of blood that forms when blood components, such as platelets and fibrin, aggregate to stop bleeding from injured vessels, a key component of the hemostatic process.