Win Goods Inc. is a large multinational conglomerate. As a single business unit, the company's stock price is estimated to be $200. However, by adding the actual market stock prices of each of its individual business units, the stock price of the company as one unit would be $300. What is Win Goods experiencing in this scenario?
A) diversification discount
B) learning-curve effects
C) experience-curve effects
D) economies of scale

Question

Quizplus · Accepted Answer

Win Goods is experiencing a diversification discount in this scenario. Diversification discount is a situation in which the stock price of highly diversified firms is valued at less than the sum of their individual business units.