Internal New Ventures Are Likely to Be Preferred When

question 58

Multiple Choice

Internal new ventures are likely to be preferred when

• A) entry barriers are high.
• B) exit barriers are high.
• C) a company possesses a set of valuable competencies in its existing businesses that can be leveraged to enter new business.
• D) the company needs more mega-opportunities.
• E) the industry is in the mature stage of the industry life cycle.

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Definitions:

Correlation Coefficient

A quantitative indicator that determines both the magnitude and orientation of a straight-line association between two variables represented on a scatter diagram.

Stock Returns

The gain or loss made on a stock, including dividends, over a specific period, expressed as a percentage of the investment's initial cost.

Efficient Market

A market hypothesis that states all available information is fully reflected in asset prices, implying that stocks always trade at their fair value, making it impossible to beat the market through expert stock selection or market timing.

Risk-Adjusted Returns

A measure of the return on an investment relative to the risk of that investment, often used to assess the performance of investment managers.