Diversifying into New Businesses Is Justifiable Only If It

question 83

Multiple Choice

Diversifying into new businesses is justifiable only if it

• A) results in increased profit margins and bigger total profits.
• B) builds shareholder value.
• C) helps a company escape the rigors of competition in its present business.
• D) leads to the development of a greater variety of distinctive competencies and competitive capabilities.
• E) helps the company overcome the barriers to entering additional foreign markets.

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Definitions:

Clear

in an economic or financial context often means to settle a transaction or complete a trade or payment process.

Federal Reserve's Assets

These are financial assets held by the Federal Reserve Bank, including government securities, mortgage-backed securities, and loans to banks.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

Required Reserve Ratio

The fraction of deposits that a bank is required by regulation to hold in reserve, not loaning them out, ensuring banks can meet their depositor's demands.