A Negative Effect of Acquiring Other Firms for the Purpose

question 30

Multiple Choice

A negative effect of acquiring other firms for the purpose of innovation is:

• A) innovations cannot be transferred between organizations.
• B) the effect it can have on the firm's own ability to produce innovations.
• C) innovations may not actually be present in the firm after the purchase is completed.
• D) the acquired firm's employees usually leave.

---

Definitions:

Risk-free Rate

A hypothetical yield of an investment that is considered to have no financial risk, usually mirrored by the returns on government bonds.

Abnormal Return

The difference between the actual return of an investment and the expected return given its risk and the market's performance.

Advisory Service

A service provided by financial advisors or professionals offering expert advice on investment, planning, and managing finances.

Dividend

A share of a corporation's profits allocated to its shareholders, typically in cash or in the form of more shares.