Companies That Pursue Related Diversification Are More Likely to Improve

question 5

Multiple Choice

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a

• A) diversification discount.
• B) diversification premium.
• C) conglomerate discount.
• D) conglomerate premium.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or business activity.

Total Revenue

The total income generated by the sale of goods or services related to the company's primary operations.

Peak Efficiency

The point at which an operation or process achieves its maximum output with the lowest input, without waste or undue strain on resources.

Operate

To function or work in a specified manner.