To Create Value for Shareholders Via Diversification, a Company Must

question 35

Multiple Choice

To create value for shareholders via diversification, a company must

• A)get into new businesses that are profitable.
• B)diversify into industries that are growing rapidly.
• C)spread its business risk across various industries by only acquiring firms that are strong competitors in their respective industries.
• D)diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses.
• E)diversify into businesses that have either key success factors or value chains that are similar to its present businesses.

Know important international agreements and organizations affecting global operations.

Understand the basic characteristics and rights associated with common and preferred stocks.

Comprehend the concept and implications of dividend policy and its effect on shareholder value.

Grasp the principles of the dividend growth model and how it is used to value stocks.

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Definitions:

Economic Advantage

A benefit or edge that allows an entity, such as a business or country, to outperform competitors or achieve superior economic outcomes.

Fracking

A method of extracting oil and natural gas from the earth by injecting high-pressure fluid into subterranean rocks to force open fissures.

Regional Trade Agreements (RTAs)

Treaties between two or more geographically close countries that facilitate trade by reducing tariffs and import quotas, enhancing economic integration.