The expression "conglomerate discount" means:
A)The ability of a widely diversified firm to exploit economies of scope to reduce its overall costs
B)The willingness of stock exchanges to offer discounted listing fees in order to attract highly diversified firms
C)The stock market tends to value diversified companies at less than their break-up value
D)The lower rates of return that highly diversified companies offer to their shareholders.

Question

Quizplus · Accepted Answer

Conglomerate discount refers to the tendency of the stock market to undervalue diversified companies because of the complexity and difficulty in understanding their business structure and performance, leading to a lower stock price compared to the sum of its individual parts (break-up value).

The Expression "Conglomerate Discount" Means