Although Unique Risk Is Present in Differing Amounts, Individual Stocks

question 86

Multiple Choice

Although unique risk is present in differing amounts, individual stocks are:

• A) exposed to the same amount of market risk.
• B) exposed to differing amounts of market risk also.
• C) not exposed to market risk; only the general economy is subject to market risk.
• D)able to diversify away their market risk.

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Definitions:

Vertical Acquisition

The acquisition of a company operating within the same industry but at a different level of the supply chain, enhancing supply chain efficiency.

Horizontal Acquisition

The process of a company acquiring another company in the same industry at the same level of the supply chain to enhance its market share.

Conglomerate Acquisition

A conglomerate acquisition occurs when a company buys another company in a completely unrelated business sector, aiming for diversification of business interests.

Poison Pill

A defensive strategy used by companies to prevent or discourage hostile takeovers by making the company less attractive to the acquirer.