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.

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Definitions:

NAV

Net Asset Value, the total value of a fund's assets minus its liabilities, often used in the context of mutual funds or ETFs to represent the per-share/unit price.

EMH

The Efficient Market Hypothesis suggests that it is impossible to consistently achieve higher returns than overall market due to all information being already reflected in stock prices.

Generate Lower Costs

The process or strategy aimed at reducing production or operational expenses to enhance profitability.

Equity Carve-Outs

A corporate strategy of creating a new, independent company through the sale or distribution of new shares of an existing part of the company to external or existing shareholders.