The Three Main Types of Diversification Strategies Are

question 29

Multiple Choice

The three main types of diversification strategies are:

• A) acquisitions, joint ventures, and divestments.
• B) acquisitions, mergers, and buyouts.
• C) acquisitions, internal new ventures, and joint ventures.
• D) related acquisitions, unrelated acquisitions, and mergers.
• E) joint ventures, strategic alliances, and long-term contracts.

Recognize the role and implications of credit default swaps in financial risk management.

Identify the benefits and risks associated with asset securitization and its role in expanding investment choices.

Grasp the significance and functions of special purpose vehicles (SPVs) in asset-backed securities.

Understand the use of credit enhancements in asset securitization and their effects on credit risk.

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Definitions:

Business Combinations

Transactions in which one entity gains control over another and they are combined into one entity, often involving mergers, acquisitions, or consolidations.

Voting Common Stock

Shares in a company that grant the holder the right to vote on corporate matters, such as electing the board of directors.

Fair Value

The market price for divesting an asset or the obligation to liquidate a liability in a harmonious transaction among interchange participants at the established evaluation period.

Book Value

Book value is the value of an asset as it appears on a balance sheet, calculated as the cost of the asset minus any depreciation.