Diversification Ought to Be Considered When a

question 25

Multiple Choice

Diversification ought to be considered when a

• A)company is under pressure to create a more attractive and cost-efficient value chain.
• B)company begins to encounter diminishing growth prospects in its mainstay business.
• C)company's profits are being squeezed and it needs to increase its net profit margins and return on investment.
• D)company lacks sustainable competitive advantage in its present business.
• E)company has run out of ways to achieve a distinctive competence in its present business.

---

Definitions:

Expected Value

The anticipated value or mean of a random variable, representing the center of its distribution.

Portfolio

A selection of monetary assets, covering equities, fixed-income securities, commodity holdings, liquid assets, and assets nearing cash, containing mutual funds and Exchange-Traded Funds.

Stocks

Shares representing ownership interests in corporations, allowing investors to claim on businesses' assets and earnings.

Variance

The average of the squared differences from the mean, providing a measure of how spread out numbers are.