What Rationales for Unrelated Diversification Are Not Likely to Increase

question 33

Multiple Choice

What rationales for unrelated diversification are not likely to increase shareholder value?

• A) reduce risk by spreading the company's investments over a set of truly diverse industries
• B) enable a company to achieve rapid or continuous growth
• C) stabilize earnings; that is,market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses
• D) provide benefits to managers such as high compensation and reduction in employment risk
• E) all of these choices are correct.

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