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

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Definitions:

Paper Trail

A series of documents or records that provide evidence of a person's or organization's transactions, actions, or history.

Expected Returns

The anticipated amount of profit or loss an investment is predicted to generate based on historical or projected performance.

Securities

Securities that signify ownership in a corporation that's publicly traded (such as shares), a debt obligation to a government entity or a company (through bonds), or entitlements to ownership through options.

Prospectus

A formal document that companies use to describe the securities they are offering for participants and investors.