In Making a Decision to Diversify,managers Should Use Value-Creating Reasons

question 40

Multiple Choice

In making a decision to diversify,managers should use value-creating reasons or face the risk that their firms will be acquired and they could lose their jobs. Which of the following is a value-creating reason to diversify?

• A)economies of scope
• B)desire for increased compensation
• C)reduced managerial risk
• D)low performance

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Definitions:

Depreciation

A decrease in the value of a currency as measured by the amount of foreign currency it can buy.

Intermediate Goods

Goods or services used in the production process of final goods and services but are not themselves final products.

Final Goods

These are products and services that have been completed and are ready for consumption or use by the end consumer, not to be further processed or resold.

Inventory Goods

Items that a business holds for the ultimate goal of resale or trade, making up an essential part of a company's current assets.