Diversification Is a Strategy Whose Goal Is Growth,based On

question 37

Multiple Choice

Diversification is a strategy whose goal is growth,based on:

• A) selling more of the firm's product or service to the existing customer base.
• B) selling in areas or to groups previously not served by the business.
• C) selling existing customers a product or service they have never bought before.
• D) adding new products or services to the firm's existing collection of offerings.

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Definitions:

Source of Funds

Refers to the origins of the capital or money a company uses for its operations or investments.

Cost of Capital

A metric used to determine the minimum expected return needed on an investment in order to be deemed a worthwhile expenditure, reflecting the investor's required return.

Systematic Risk

The inherent risk associated with the entire market or market segment, which cannot be eliminated by diversification.

SML Approach

The SML (Security Market Line) Approach is a relationship depicted in a graph that shows the expected return of a security against its risk, represented by beta.