Chartered Financial Analyst Level 2
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30 With regard to an analyst's initial evaluation of a corporate restructuring, which of the following are two dimensions of materiality?
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A
Size and fit
B
Fit and timing
C
Size and timing
Explanation:
Explanation:
The two dimensions of materiality in corporate restructuring analysis are:
1. Size Dimension:
- Measures the quantitative impact of the restructuring
- Assesses whether the transaction is significant relative to the company's overall scale
- Considers metrics like revenue impact, asset size, or market capitalization
2. Fit Dimension:
- Evaluates the strategic alignment of the restructuring
- Assesses how well the transaction fits with the company's core competencies and strategic objectives
- Considers competitive positioning and operational synergies
Why not the others:
- Timing is not typically considered a primary dimension of materiality in restructuring analysis
- The combination of size and fit provides both quantitative and qualitative assessment of materiality
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