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

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 move will

A) make the company better off because it will produce a greater number of core competencies.
B) make the company better off by improving its balance sheet strength and credit rating.
C) make the company better off by spreading shareholder risks across a greater number of businesses and industries.
D) produce a synergistic outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.
E) help each business earn exactly what they were earning before coming under the same corporate umbrella.