Firms Are Likely to Achieve Significant Diversification by Investing in All

question 37

Multiple Choice

Firms are likely to achieve significant diversification by investing in all of the following except for

• A) Different but uncorrelated industries in the same country
• B) Different companies in the same industry in the same country
• C) The same industries in different countries
• D) Different industries in different countries.
• E) Different companies in different industries in the different countries

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collectible, reflecting potential losses due to credit sales.

Uncollectible Receivables

Debts owed to a company that are considered unlikely to be paid by the debtor.

Bad Debt Expense

An expense account reflecting the estimated amount of receivables that are expected not to be collected.

Debit Balance

A situation where the total debits in an account exceed the total credits. It is commonly found in asset and expense accounts.