The rising ratio of divestitures to new acquisitions which has occurred in the later part of this century suggests that
A) poison pills are no longer effective as a defence 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 indicates that many firms have diversified too much and are now divesting in order to streamline and focus their operations. This suggests that too much diversification has strained operating capabilities of firms.

The Rising Ratio of Divestitures to New Acquisitions Which Has