An Advantage of Diversification Is a Better Internal Labour Market

question 1

Multiple Choice

An advantage of diversification is a better internal labour market because

• A)there's a saving on advertising costs.
• B)there's no commission payable to the internal human resources department.
• C)employees can be transferred rather than hired / fired, and the firm knows these people well.
• D)the firm does not need to invest so much in training new recruits.

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Definitions:

Preemptive Rights

A shareholder's right to buy new shares issued by a company in proportion to their existing shareholding, before the shares are offered to the public.

Stock Purchase

The act of buying shares in a company, giving the purchaser a portion of ownership in that company.

Common Stock Holders

Individuals or entities that own a share of common stock in a corporation, granting them voting rights and a portion of the company’s profits.

Preferred Stockholders

Preferred stockholders are investors who own preferred shares in a company, which often entitle them to fixed dividends and priority over common stockholders in asset liquidation.