Investors Often Struggle to Understand the Complexity of Diversified Companies

question 16

Multiple Choice

Investors often struggle to understand the complexity of diversified companies, and this can result in relatively poor performance by the stocks of such companies. This is known as a ________.

• A) divestment discount
• B) diversification discount
• C) spin-off strategy
• D) liquidation opportunity
• E) retracement opportunity

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Definitions:

Mortgage Trust

A type of investment trust that pools mortgage loans, offering investors shares in the income derived from mortgage interest payments.

Unit Trust

A form of collective investment constituted under a trust deed, similar to mutual funds in certain jurisdictions.

Global Fund

An investment fund that diversifies its portfolio by investing in securities from markets around the world.

Securities

Tradable financial instruments that represent ownership or creditor relationships, such as stocks, bonds, and options.