An Acquisition Completed Simply to Diversify a Firm Will

question 5

Multiple Choice

An acquisition completed simply to diversify a firm will:

• A) create excessive synergy in almost all situations.
• B) lower systematic risk and increase the value of the firm.
• C) benefit the firm by eliminating unsystematic risk.
• D) benefit the shareholders by providing otherwise unobtainable diversification.
• E) generally not add any value to the firm.

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Definitions:

Passing Through

A term used to describe a line, curve, or surface meeting or going through a particular point or set of points.

Points

Specific locations in a space, defined by coordinates, with no dimension or size.

Slope

The measure of the steepness of a line, typically represented as the ratio of the vertical change to the horizontal change between two points on the line.

Points

The basic unit of geometry, representing a location in space with no dimension.