During a financial downturn, a firm may consider diversification as a value-neutral defensive strategy to protect itself against what?
A) Loss of market power
B) Managerial employment risk
C) Inefficient internal capital allocation
D) Uncertain future cash flows

Question

Quizplus · Accepted Answer

Diversification can help protect against uncertain future cash flows by spreading risk across different products or markets, thus stabilizing income during financial downturns.

During a Financial Downturn, a Firm May Consider Diversification as a Value-Neutral