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:

One-Year Provision

A legal principle that requires certain contracts, such as those that cannot be fulfilled within one year, to be in writing to be enforceable.

Contract Comes into Existence

The point at which an agreement between two or more parties is legally enforceable, usually triggered by an offer, acceptance, and adequate consideration.

Specific Performance

A legal remedy requiring a party to fulfill their obligations under a contract, rather than providing monetary compensation for failing to do so.

Contract Remedy

The legal means available to a party to enforce, redress, or protect their rights under a contract.