The Essential Requirement for Different Businesses to Be "Related" Is

question 71

Multiple Choice

The essential requirement for different businesses to be "related" is that

• A) their value chains possess competitively valuable cross-business relationships.
• B) the products of the different businesses are bought by much the same types of buyers.
• C) the products of the different businesses are sold in the same types of retail stores.
• D) the businesses have several key suppliers in common.
• E) the production methods that they employ both entail economies of scale.

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Definitions:

Required Return

The minimum return that keeps an investor in a particular stock. Generally a function of the risk perceived in the investment.

Target Capital Structure

The ideal mix of debt, equity, and other financing sources a company aims to maintain over time.

Invested Funds

Money allocated by individuals or organizations to stocks, bonds, or other investments with the expectation of earning a return.

Target Structure

An ideal capital structure a company aims to achieve, usually a mix of debt and equity that minimizes cost of capital while maximizing valuation.