Which Factor Is a Limit to the Ability of Diversification

question 141

Multiple Choice

Which factor is a limit to the ability of diversification to reduce risk?

• A)losses due to bad decision making
• B)key raw materials
• C)industrial life cycles
• D)economic losses from bad weather

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Definitions:

Initial Investments

The initial capital outlay for starting a project, acquiring an asset, or launching a business, typically including costs for equipment, inventory, and facilities.

Capital Budgeting

The process a business undertakes to evaluate and prioritize investments in long-term assets based on their potential to generate income.

Incremental Sales

Sales generated over and above a predefined baseline, often used to measure the effectiveness of sales promotions or new marketing strategies.

Operating Expenses

The costs associated with the normal day-to-day operations of a business, excluding costs directly related to producing goods.