Which Diversification Strategy Is Based on the Idea That the Company

question 57

Multiple Choice

Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity?

• A) A technology acquisition strategy
• B) Related diversification
• C) A restructuring strategy
• D) Total diversification
• E) A taper diversification strategy

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Definitions:

Market Beta

A measure of a stock's volatility in relation to the overall market; indicates the stock's sensitivity to market movements.

Factor Portfolio

A portfolio constructed to have a high sensitivity to specific risk factors, aiming to capture the risk premiums associated with those factors.

Well-diversified Portfolio

An investment portfolio constructed to minimize risk by spreading investments across various asset classes.

Beta

The volatility or risk associated with a specific investment relative to the broader market.