The Primary Source of Value Creation from Diversification Is Likely

question 11

Multiple Choice

The primary source of value creation from diversification is likely to be

• A)the linkages or synergies between the businesses concerned.
• B)risk reduction through balancing of counter-cyclical businesses.
• C)getting a price reduction when purchasing common resource inputs.
• D)balancing of cash generation, reducing the need to obtain investment finance externally.

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Definitions:

Insurance Policy

A contract between an insurer and a policyholder in which the insurer agrees to compensate the policyholder for loss or damage specified in the policy, in exchange for premiums paid by the policyholder.

Expected Utility

A theory in economics that calculates the utility expected from risky or uncertain investments, aiming to quantify preferences over risky alternatives.

Big XII Championship

An annual championship game determining the conference champion of the Big XII Conference, primarily in American college football.

U.S. Treasury Bills

Short-term government securities issued by the United States Department of the Treasury with maturity periods ranging from a few days to 52 weeks.