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:

Neurotransmitters

Chemical substances that transmit signals across a synapse from one neuron to another in the nervous system.

MAOIs

Short for Monoamine Oxidase Inhibitors, a class of antidepressant drugs that work by inhibiting the enzyme responsible for breaking down neurotransmitters such as serotonin and norepinephrine.

Restricted Diet

A diet that limits or eliminates certain foods or nutrients, often for medical or health reasons.

High Blood Pressure

A condition in which the force of the blood against the walls of the arteries is consistently too high, leading to health risks.