Acquisition Is the Preferred Mode of Diversification for Most Firms

Multiple Choice

Acquisition is the preferred mode of diversification for most firms because:

A) For companies with high price/earnings ratios,acquiring companies in other sectors that have low price/earnings ratios offers an attractive means of boosting market capitalization
B) Empirical research shows that diversifying acquisitions typically create significant value for the acquiring firm
C) The alternative of acquiring a minority stake does not give the diversifying firms significant decision-making influence over the target firm
D) The alternative of setting up a new enterprise in the industry to be entered is slow and risky.