A Sound Justification for Unrelated Diversification Is That

question 3

Multiple Choice

A sound justification for unrelated diversification is that

• A)doing so can result in risk reduction by spreading a company's investments over a set of diverse industries
• B)doing so can meet expectations for rapid or continuous growth
• C)doing so can stabilize earnings, i.e., market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses
• D)doing so can support managerial motives including the prospects for higher compensation
• E)doing so can deliver enhanced shareholder value if an undervalued company can be purchased at a bargain price

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Definitions:

Contract Expired

A legal agreement that has reached the end of its term and thus is no longer in effect, often requiring renewal or negotiation of new terms.

Lock Out

A situation where employers prevent employees from entering the workplace, typically during a dispute.

Customer Access

The ease with which customers can reach and purchase products or services from a company.

Management

The process of planning, organizing, leading, and controlling resources to achieve organizational goals.