Is it correct to claim that diversification provides a benefit of "risk spreading"?
A)Yes, in most cases, but it's of little interest or value to shareholders, since they can do that more easily and cheaply themselves
B)No, usually that is not the case
C)The answer is not that simplistic
D)Risk spreading is not always a benefit

Question

Quizplus · Accepted Answer

Diversification does provide a benefit of risk spreading, but it may not be of much interest or value to shareholders since they can do it themselves. Therefore, it is important for companies to consider other potential benefits of diversification, such as economies of scale or increased market power.

Is It Correct to Claim That Diversification Provides a Benefit