Acquisition Is the Preferred Mode of Diversification for Most Firms

question 18

Multiple Choice

Acquisition is the preferred mode of diversification for most firms because:

• A)For companies with high price/earnings ratios,acquiring companies in other sectors that have low price/earnings ratios offers an attractive means of boosting market capitalization
• B)Empirical research shows that diversifying acquisitions typically create significant value for the acquiring firm
• C)The alternative of acquiring a minority stake does not give the diversifying firms significant decision-making influence over the target firm
• D)The alternative of setting up a new enterprise in the industry to be entered is slow and risky.

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Definitions:

Sexual Promiscuity

Engaging in sexual activities with various partners without commitment, often considered risky in terms of physical and emotional health.

Antidepressant Medication

Drugs prescribed to relieve or prevent the symptoms of depression and other mood disorders.

Therapeutic Response

The reaction or benefit a patient experiences following a treatment, indicating the effectiveness of the intervention.

Behavioral Change

Modifications or differences in human actions or reactions, often as a result of psychological interventions, personal decisions, or external influences.