Reference no: EM132539724

Diversification that reduces unsystematic risk is likely to be associated with less variance of a firm's cash flows. This is likely to benefit:

Group of answer choices

Shareholders, because they are sensitive to all forms of risk

Bondholders, because greater variability of cash flows increases a firm's vulnerability to default on payments to bondholders

Both groups

Neither group

The general trend of the past four decades has been for companies to divest their "noncore" businesses. Exceptions to this trend include:
Group of answer choices

(a) Large e-commerce companies such as Amazon, Alphabet, Alibaba, and Tencent

(b) Large business groups in emerging market countries

Both (a) and (b)

Neither (a) nor (b)-the refocussing trend is general across sectors and across countries

Demand-side economies of scope are economies that accrue to customers from buying bundles of different products. Examples of economies of scope include:

Group of answer choices

(a) Discount stores that offer a wide range of products

(b) Suppliers of electronic systems that comprise hardware, an operating system and applications

Both (a) and (b)

Neither (a) nor (b)

9 The main difference between two businesses being strategically related rather than operationally related is:

Group of answer choices

Strategic relatedness involves the application of common general management systems and capabilities to the two businesses; operational relatedness involves the sharing of resources

Strategic related is about corporate-level synergies; operational relatedness involves business-level synergies

Operational relatedness requires a multidivisional structure; for strategic relatedness, a holding company structure suffices

Operational relatedness requires that the different products share production plants and distribution systems; strategic relatedness does not