Managers Wishing to Diversify the Firm Must Remember That

question 42

Multiple Choice

Managers wishing to diversify the firm must remember that:

• A) A single-business diversification strategy generally works best.
• B) Forward integration is more successful than is backward integration.
• C) Successful diversification must be aligned with and strengthen a firm's business strategy.
• D) It is competitively advantageous to shrink the size and scope of most firms.

---

Definitions:

Abnormal Returns

Returns on a security or portfolio that differ significantly from the expected rate of return, often resulting from specific events.

Macro Forecasting

Macro Forecasting involves projecting the overall economic conditions and trends, such as inflation rates, interest rates, and GDP growth, to inform investment decisions.

Investments

The allocation of resources, such as time, money, or effort, in the expectation of generating an income or profit.

Market Value

The current price at which an asset or company could be bought or sold in the market.