Diversified Firms Exhibit Two Key Advantages but Only One Disadvantage

question 22

Multiple Choice

Diversified firms exhibit two key advantages but only one disadvantage regarding internal capital allocation:

• A)Therefore, on balance, internal capital markets are
• Preferable
• B)This isn't the whole story. Other major
• Disadvantages swing the balance the other way
• C)It's not the number of disadvantages, but the
• Overall balance which matters
• D)Political processes always outweigh the
• Advantages

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Definitions:

NSF Check

a check that has been returned by a bank because the account it was drawn on does not have sufficient funds.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those presented in a bank statement to find discrepancies.

Internal Control

A system of policies and procedures implemented by an entity to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Policies and Procedures

Guidelines and processes set by an organization to ensure its operations comply with regulations and are consistent with its objectives.