When an Organization Attempts to Grow by Merging with or Acquiring

question 66

Multiple Choice

When an organization attempts to grow by merging with or acquiring firms in different but associated industries,the strategy is known as a ________ strategy.

• A)related differentiation
• B)horizontal integration
• C)vertical integration
• D)related diversification

---

Definitions:

Systematic Risk

The risk inherent to the entire market or an entire market segment, influenced by factors such as economic, geopolitical, and financial events, which cannot be eliminated through diversification.

Expected Return

The anticipated return on an investment, factoring in the probability of various outcomes.

Security Market Line

A line that represents the relationship between the risk of investing in a security and its expected return, as per the Capital Asset Pricing Model.

Market Risk Premium

The extra yield an investor anticipates when they invest in a volatile market portfolio as opposed to assets that are free from risk.