A Company That Is Already Diversified May Choose to Broaden

question 67

Multiple Choice

A company that is already diversified may choose to broaden its business base by building positions in new related or unrelated businesses because

• A) it has resources or capabilities that are eminently transferable to other related or complementary businesses.
• B) the company's growth is sluggish and it needs the sales and profit boost that a new business can provide.
• C) management wants to lessen the company's vulnerability to seasonal or recessionary influences.
• D) unfavorable driving forces face the company's core business.
• E) All of these.

Understand electron behavior in bonding and its impact on chemical properties.

Identify and describe the types of chemical bonds and their formation.

List the four most abundant elements in the human body and their importance.

Recognize the role of ions and electrolytes in biological systems.

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Definitions:

Effective-Interest Method

A way of calculating the amortized cost of a bond and the amount of interest expense over its life, reflecting the constant rate of interest over the period.

Bond Discount Amortization

The process of gradually writing off the discount on a bond over the life of the bond, reflecting the increase in its value as it nears maturity.

Carrying Value

The net amount at which an asset is valued on the balance sheet, taking into account depreciation, amortization, and impairment costs.

Effective-Interest Method

A method of amortizing the discount or premium on bonds payable over the life of the bonds, providing a periodic interest expense that reflects a constant rate of interest.