Diversification Premium Is a Situation in Which

question 79

Multiple Choice

Diversification premium is a situation in which

• A) customers have to pay premium prices on products manufactured by firms pursuing unrelated diversification due to the lack of economies of scope.
• B) the overall value creation of highly diversified firms is more than the sum of the value created by individual business units.
• C) the stock price of related-diversification firms is valued at greater than the sum of their individual business units.
• D) shareholders are benefitted from the market capitalization of a highly diversified firm because of its economies of scale.

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