Which of the Following Firms Is Most Prone to Experiencing

question 75

Multiple Choice

Which of the following firms is most prone to experiencing a diversification discount?

• A) a company that deals in petroleum as well as natural gas
• B) a company that derives its revenues from selling aerated drinks and health drinks
• C) a company that pursues unrelated diversification
• D) a company that pursues related-constrained diversification

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Definitions:

Sales Volume

The amount of sales achieved by a business in a specific period, usually measured in units or revenue.

Fixed Cost

Expenses that do not change in relation to the volume of production or sales, such as rent, salaries, and insurance.

Average Property Tax

The typical amount levied on real estate by a government authority, calculated as a percentage of assessed property value and averaged across similar properties or regions.

Sales Volume

The number of units of a product sold in a given period, often used to measure the business activity level.