Asked by
Ayesha Mulani
on Nov 07, 2024
Verified
Which of the following is the best definition of diversification?
A) The sale of stock in a wholly owned subsidiary via an IPO.
B) A targeted share repurchase method.
C) The sale of assets, operations, divisions, and/or segments of a business to a third party.
D) Investment in more than one asset; returns do not move proportionally in the same direction at the same time, thus reducing risk.
E) Rules and practices relating to how corporations are governed by management, directors, and shareholders.
Diversification
The strategy of spreading investments across various financial instruments, industries, or other categories to reduce risk.
Investment
entails the allocation of resources, usually money, into assets or projects expected to generate returns or profits over time.
Risk
The exposure to uncertainty or the potential of loss that can occur as a result of an investment's actual return differing from the expected return.
- Evaluate the significance of diversification in the context of mergers and acquisitions.
Verified Answer
ST
Learning Objectives
- Evaluate the significance of diversification in the context of mergers and acquisitions.