When an Acquiring Firm That Desires to Expand to a New

question 61

Multiple Choice

When an acquiring firm that desires to expand to a new market where it does not have a product merges with a firm in that market,and continues to produce the other firm's product in the target market,it results in which of the following type of merger?

• A)Vertical extension
• B)Market extension
• C)Diversification
• D)Product extension
• E)Horizontal extension

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Definitions:

Risky Asset

A financial instrument that has a significant degree of risk associated with it, potentially leading to loss or gain.

Negatively Correlated

Describes two variables that move in opposite directions; as one increases, the other tends to decrease.

Variance

A measure of the dispersion of a set of data points around their mean value, indicating how spread out the data points are.

Portfolio

A collection of investments held by an individual or an institution.