Which of the Following Is Not an Advantage of the New-Venture

question 113

Multiple Choice

Which of the following is not an advantage of the new-venture division structural approach?

• A) It provides a system for investing in a team assigned specifically to new-venture creation.
• B) It can be cost-conscious while still encouraging risk taking and experimentation.
• C) It is a form of diversification.
• D) It reduces overhead costs associated with new-venture creation.

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Definitions:

Expected Risk Premium

The additional return over the risk-free rate that investors demand to compensate for the risk of holding a risky asset.

Systematic Risk Principle

The concept that an investor can reduce the overall risk of an investment portfolio through diversification, except for inherent market risks that cannot be diversified away.

Efficient Markets Hypothesis

The efficient markets hypothesis is an investment theory that states it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.

Security Market Line

A representation in finance that shows the relationship between risk and return of a market.