Which of the Following Benefits of Diversification Explains the Idea

question 29

Multiple Choice

Which of the following benefits of diversification explains the idea that combining unrelated businesses can allow firms to finance projects through cross-subsidization when they previously were unable to finance the same projects externally?

• A)Use of internal capital markets
• B)Economies of scale and scope
• C)Economizing on transaction costs
• D)Diversifying shareholder portfolios
• E)Identifying undervalued firms

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Definitions:

Performance Strategy

A plan of action designed to achieve specific outcomes or improvements in performance within an organization.

Irrelevant Skills

Abilities or competencies that do not apply or provide benefit to a particular task, role, or job requirement.

Talented People

Individuals possessing special skills, abilities, or aptitudes that distinguish them in specific areas or disciplines.

Self-managed

A rephrasing of Self-Managed Teams; it refers to individuals or teams that take responsibility for managing their work and decision-making processes autonomously.