Which of the Following Statements About Corporate Diversification Is Incorrect

Multiple Choice

Which of the following statements about corporate diversification is incorrect?

A) Creating added value for shareholders via diversification requires building a multibusiness company where the whole is greater than the sum of its parts.
B) Diversification moves that satisfy all three diversification tests have the greatest potential to grow shareholder value over the long term.
C) The more attractive an industry's prospects are for growth and good long-term profitability,the less expensive it can be to enter.
D) Diversification cannot be considered a success unless it results in added shareholder value-value that shareholders cannot capture for themselves by spreading their investments across the stocks of companies in different industries.
E) Shareholder value is not created by diversification unless it passes the "better off" or "1 + 1 = 3 test."