If a Strategic Business Unit Is Recognized as a Cash

question 81

Multiple Choice

If a strategic business unit is recognized as a cash cow,it is advisable to

• A) harvest the business.
• B) invest into the business to hold its current position.
• C) divest the business due to its low market share.
• D) maintain it till it turns into a dog.

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Definitions:

Beta

An evaluation of the unsteadiness, or systematic jeopardy, of a security or collective financial investments when compared to the market as a whole.

CAPM

The Capital Asset Pricing Model, a formula used to determine the theoretical expected return of an investment given its risk relative to the market.

Risk-free Asset

An investment with zero risk of financial loss, typically considered to be government bonds.

Systematic Risk

Systematic risk refers to the risk inherent to the entire market or market segment, which cannot be mitigated through diversification.