Compared to Diversification That Is Grounded in Intangible Resources, Diversification

question 117

True/False

Compared to diversification that is grounded in intangible resources, diversification based on financial resources only is more visible to competitors and thus more imitable and less likely to create value on a long-term basis.

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Definitions:

Dividend Growth Model

A method for determining the value of a stock by using predicted dividends and discounting them back to their present value.

Cost Of Equity

The return that equity investors require on their investment in the firm.

Systematic Risk

The risk inherent to the entire market or market segment, also known as market risk, which cannot be eliminated through diversification.

Subjective Approach

An approach to making decisions or assessments that relies on individual preferences, emotions, or thoughts, instead of objective data or proof.