The rising ratio of divestitures to new acquisitions which occurred in the past suggests that
A) poison pills are no longer effective as a defense against takeovers.
B) too much diversification strained the operating capabilities of many firms.
C) the portfolio effect has been a highly successful method of reducing risk.
D) multinational firms are increasingly considered highly risky investments.

Question

Quizplus · Accepted Answer

The rising ratio of divestitures to new acquisitions suggests that many firms have experienced the negative effects of diversification, leading to a strain on their operating capabilities. This has resulted in divestitures as a way for firms to refocus on their core competencies and streamline their operations.

The Rising Ratio of Divestitures to New Acquisitions Which Occurred