Which of the following is a correct statement?
A) EPS growth cannot occur as the result of an acquisition.
B) EPS growth cannot occur from an acquisition unless it creates no additional value.
C) Stockholders can achieve diversification on their own.
D) Diversification is usually beneficial in a merger because it reduces systematic risk.
E) Diversification, by itself, is one reason that value may be created in a merger.

Question

Quizplus · Accepted Answer

Stockholders can indeed achieve diversification on their own by investing in a variety of stocks or other financial instruments, thus spreading their risk. This concept is based on the principle that investors can manage their risk exposure by selecting a mix of investments.

Which of the Following Is a Correct Statement