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# To avoid a hostile takeover attempt, the board of directors

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Senior Manager
Joined: 05 Oct 2006
Posts: 266

Kudos [?]: 22 [0], given: 0

To avoid a hostile takeover attempt, the board of directors [#permalink]

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17 Jan 2007, 09:32
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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 directorsâ€™ 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 planâ€™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.
(E) A new, inexpensive process is discovered for making paper pulp, and paper prices fall to 60 percent of their former level.

Kudos [?]: 22 [0], given: 0

Director
Joined: 24 Aug 2006
Posts: 743

Kudos [?]: 207 [0], given: 0

Location: Dallas, Texas

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17 Jan 2007, 10:02
C !
_________________

"Education is what remains when one has forgotten everything he learned in school."

Kudos [?]: 207 [0], given: 0

Intern
Joined: 02 Jan 2007
Posts: 41

Kudos [?]: 5 [0], given: 0

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17 Jan 2007, 16:47
C for me. All the other choices hurt the business.

Kudos [?]: 5 [0], given: 0

Director
Affiliations: FRM Charter holder
Joined: 02 Dec 2006
Posts: 726

Kudos [?]: 102 [0], given: 4

Schools: Stanford, Chicago Booth, Babson College
Re: cr -takeover [#permalink]

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18 Jan 2007, 05:51
AK47 wrote:
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 directorsâ€™ 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 planâ€™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.

This will help the company pay off its debts easily in 5 years and will contribute towards the success of the plan.

(D) Large-screen televisions drop dramatically in price due to surprise alterations in trade barriers with Japan; movie theater attendance dwindles as a consequence.
(E) A new, inexpensive process is discovered for making paper pulp, and paper prices fall to 60 percent of their former level.

Kudos [?]: 102 [0], given: 4

VP
Joined: 07 Nov 2005
Posts: 1115

Kudos [?]: 53 [0], given: 1

Location: India

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18 Jan 2007, 21:02
Easy C.
_________________

Trying hard to conquer Quant.

Kudos [?]: 53 [0], given: 1

Senior Manager
Joined: 05 Oct 2006
Posts: 266

Kudos [?]: 22 [0], given: 0

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18 Jan 2007, 22:03
OA IS C

Kudos [?]: 22 [0], given: 0

Senior Manager
Joined: 05 Aug 2005
Posts: 409

Kudos [?]: 78 [0], given: 0

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18 Jan 2007, 23:21
C it is .....Easy but lengthy

Kudos [?]: 78 [0], given: 0

18 Jan 2007, 23:21
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# To avoid a hostile takeover attempt, the board of directors

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