Which of the Following Benefits of Diversification Explains the Idea

question 27

Multiple Choice

Which of the following benefits of diversification explains the idea that corporate diversification can provide situations where an acquiring firm determines the stock price for firm they intend to acquire is too low?

• 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:

Prehistoric Fault

A crack or fracture in the Earth's crust that occurred in the geological past, often associated with the movement of tectonic plates.

Scratch Marks

Linear abrasions on rock surfaces caused by the movement of glaciers, sediments, or other geological processes.

Folding

The bending of rock layers due to stress in the Earth's crust, often resulting in wave-like structures known as anticlines and synclines.

Banded Rock

Rock that displays layers or bands of different colors or textures, often resulting from varying mineral compositions or sediment deposition.