What Rationales for Unrelated Diversification Are Not Likely to Increase

question 27

Multiple Choice

What rationales for unrelated diversification are not likely to increase shareholder value?

• A) To reduce risk by spreading the company's investments over a set of truly diverse industries
• B) To enable a company to achieve rapid or continuous growth
• C) To chance that market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses
• D) To provide benefits to managers such as high compensation and reduction in employment risk
• E) All of the above

---

Definitions:

Two-Factor Model

A theory or approach that explains a concept, phenomenon, or condition based on two distinct factors or components.

Classical Conditioning

An educational procedure in which pairing two stimuli multiple times causes a reaction initially provoked by the second stimulus to be provoked by only the first stimulus.

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.

Attachment

A deep and enduring emotional bond that connects one person to another across time and space.