Firms do not usually get rewarded by diversifying investment

Reference no: EM13813067

Firms do not usually get rewarded by diversifying investments in different lines of business because ________.

it is not possible for a firm to diversify its risk as the inflation premium is different for different projects
investors themselves can diversify by holding securities in a variety of firms; they do not need the firm to do it for them
the capital markets are efficient and they quickly respond to change in economic conditions
cash flows from such projects tend to respond less to changing economic conditions

Reference no: EM13813067

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