Which of the Following Statements About Corporate Diversification Is Incorrect

question 51

Multiple Choice

Which of the following statements about corporate diversification is incorrect?

• A)Creating added value for shareholders via diversification requires building a multibusiness company where the whole is greater than the sum of its parts.
• B)Diversification moves that satisfy all three diversification tests have the greatest potential to grow shareholder value over the long term.
• C)The more attractive an industry's prospects are for growth and good long-term profitability,the less expensive it can be to enter.
• D)Diversification cannot be considered a success unless it results in added shareholder value-value that shareholders cannot capture for themselves by spreading their investments across the stocks of companies in different industries.
• E)Shareholder value is not created by diversification unless it passes the "better off" or "1 + 1 = 3 test."

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Definitions:

Chronic Illness

A long-term health condition that persists for months or years, often requiring ongoing medical attention and affecting daily living.

Social Support

The perception and actuality that one is cared for, has assistance available from other people, and that one is part of a supportive social network.

"Circumplex"

A term often used in psychology to describe models that are arranged in a circular structure, typically to illustrate the complex interrelations between variables.

Chronic Disease

A long-lasting condition that can be controlled but not cured, often with significant impacts on individuals' life, such as diabetes, asthma, and heart disease.