Diversification Is Often a Poor Motive for Mergers Because

question 30

Multiple Choice

Diversification is often a poor motive for mergers because:

• A) vertical integration is rarely successful.
• B) investors can diversify on their own account.
• C) it does not produce economies of scale.
• D) the increase in taxes overcomes any gains in earnings.

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Definitions:

Beliefs

A consumer’s subjective perception of how a product or brand performs on different attributes based on personal experience, advertising, and discussions with other people.

Subjective Perception

An individual's personal and unique interpretation of stimuli, based on their own experiences, feelings, and biases.

Freshness Dates

Labels on food and beverage packaging that indicate the last date the product should be consumed or used for the best quality.

New Attribute

A feature introduced to a product or service to provide unique benefits and differentiate it from competitors.