A key consideration in the holding company decision is
A) the risk from the separate "companies" in the holding company being classed as one company.
B) the risk-return tradeoff due to the leverage effect.
C) the greater "distance" between top level and operating management.
D) the risk of the domino effect if one company in the holding company fails.

Question

Quizplus · Accepted Answer

The risk-return tradeoff due to the leverage effect is a key consideration because holding companies often use leverage to enhance returns, which can also increase risk.

A Key Consideration in the Holding Company Decision Is