In an efficient capital market, corporate diversification is ____.

Question

Quizplus · Accepted Answer

In an efficient capital market, all relevant information about a company is reflected in its stock price. This means that investors can achieve their desired level of diversification by buying shares in a diversified portfolio of companies rather than relying on a single company's diversification efforts. Therefore, corporate diversification is unnecessary in an efficient capital market.

In an Efficient Capital Market, Corporate Diversification Is ____