To avoid a hostile takeover attempt, the board of directors of Wellco, Inc., a
provider of life and health insurance, planned to take out large loans and use them
to purchase a publishing company, a chocolate factory, and a nationwide chain of
movie theaters. The directors anticipated that these purchase initially would
plunge the corporation deep into debt, rendering it unattractive to those who
wanted to take it over, but that steadily rising insurance rates would allow the
company to pay off the debt within five years. Meanwhile, revenues from the
three new businesses would enable the corporation as a whole to continue to meet
its increased operating expenses. Ultimately, according o the directors’ plan, the
diversification would strengthen the corporation by varying the sources and
schedules of its annual revenues.
Which of the following, assuming that all are equally possible, would most
enhance the chances of the plan’s success?
(A) A widespread drought decreases the availability of cacao beans, from which
chocolate is manufacture, diving up chocolate prices worldwide.
(B) New government regulations require a 30 percent across-the-board rate
rollback of all insurance companies, to begin immediately and to be
completed within a five-year period.
(C) Congress enacts a statute, effective after six months, making it illegal for any
parent not to carry health insurance coverage for his or her child.
(D) Large-screen televisions drop dramatically in price due to surprise alterations
in trade barriers with Japan; movie theater attendance dwindles as a
consequence.
OA is C
provider of life and health insurance, planned to take out large loans and use them
to purchase a publishing company, a chocolate factory, and a nationwide chain of
movie theaters. The directors anticipated that these purchase initially would
plunge the corporation deep into debt, rendering it unattractive to those who
wanted to take it over, but that steadily rising insurance rates would allow the
company to pay off the debt within five years. Meanwhile, revenues from the
three new businesses would enable the corporation as a whole to continue to meet
its increased operating expenses. Ultimately, according o the directors’ plan, the
diversification would strengthen the corporation by varying the sources and
schedules of its annual revenues.
Which of the following, assuming that all are equally possible, would most
enhance the chances of the plan’s success?
(A) A widespread drought decreases the availability of cacao beans, from which
chocolate is manufacture, diving up chocolate prices worldwide.
(B) New government regulations require a 30 percent across-the-board rate
rollback of all insurance companies, to begin immediately and to be
completed within a five-year period.
(C) Congress enacts a statute, effective after six months, making it illegal for any
parent not to carry health insurance coverage for his or her child.
(D) Large-screen televisions drop dramatically in price due to surprise alterations
in trade barriers with Japan; movie theater attendance dwindles as a
consequence.
OA is C
