Which of the Following Is True of a Conglomerate Merger

question 52

Multiple Choice

Which of the following is true of a conglomerate merger?

• A) It occurs when a firm acquires a supplier or a customer.
• B) It involves the combination of firms in unrelated businesses.
• C) It is achieved by acquiring a firm that is in the same general industry but neither in the same line of business nor a supplier or customer.
• D) It results in the expansion of a firm's operations in a given product line and at the same time eliminates a competitor.

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Definitions:

Credit Cards

Financial instruments issued by banks or financial institutions that allow cardholders to borrow funds with which to pay for goods and services with the obligation to pay back the borrowed money, plus any applicable interest.

Permanent Income Hypothesis

A theory suggesting that people's consumption choices are based on their long-term income expectations rather than their current income.

Induced Consumption

Consumer spending that increases as disposable income rises, and decreases as disposable income falls, unrelated to the level of interest rates.

Wealth Effect

The change in spending that accompanies a change in perceived wealth, typically when home values or investment portfolios increase.