Which of the Following Is a Value-Reducing Reason for Diversification

question 43

Multiple Choice

Which of the following is a value-reducing reason for diversification?

• A)enhancing the strategic competitiveness of the entire company
• B)expanding the business portfolio in order to diversify managerial employment risk
• C)gaining market power relative to competitors
• D)conforming to antitrust regulation

---

Definitions:

Ordinary Income

Income earned from providing services or the sale of goods, including wages, salaries, tips, and interest, which is taxed at the standard rates.

Liquidation

Liquidation is the process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent.

Partner's Interest

This refers to the ownership share or equity a partner holds in a partnership, representing their portion of the profits, losses, and capital.

Guaranteed Payment

Payments made to a partner within a partnership that are made without regard to the partnership's income and are guaranteed for services or use of capital.