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.

Know the appeals process for decisions made by administrative law judges.

Identify various types of orders and actions by administrative agencies, such as subpoenas and rule-making procedures.

Recognize the functions and affiliations of federal executive agencies within government departments.

Understand the internal operations and rule types within agencies, specifically procedural rules.

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Definitions:

Goodwill

The intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets.

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading the cost over its useful life.

Extraordinary Repairs

Major repairs or expenditures that significantly prolong the useful life of an asset, beyond normal maintenance.

Annual Depreciation

The amount of an asset's cost allocated as an expense each year over its useful life, reflecting wear and tear or obsolescence.