In which type of equity-based alliance does one firm invest in another?
A) Hubristic investment
B) Cross-shareholding
C) Licensing
D) Strategic investment

Question

In which type of equity-based alliance does one firm invest in another? 
A) Hubristic investment 
B) Cross-shareholding 
C) Licensing 
D) Strategic investment

Quizplus · Accepted Answer

Strategic investment involves one firm investing in another, with the aim of building a long-term strategic relationship that will benefit both parties. This type of equity-based alliance allows for collaboration, information sharing, and joint decision making, leading to mutual success. Hubristic investment is a type of investment where a firm makes an investment decision based on overconfidence in its abilities, without proper due diligence. Cross-shareholding involves two or more firms holding shares in each other's companies, often as a defensive measure against hostile takeovers. Licensing refers to a contractual agreement where a firm (the licensor) grants another firm (the licensee) the rights to use its intellectual property, technology, or products in exchange for fees or royalties.

In Which Type of Equity-Based Alliance Does One Firm Invest