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Company A plans to diversify by a cash acquisition of Company B an unlisted company...

Company A plans to diversify by a cash acquisition of Company B an unlisted company in another country (Country B) which operates in a different industrial sector

Company A already manufactures its product in Country B and has a loan denominated in Country B's currency

Company A regularly suffers foreign exchange losses due to volatility in the exchange rate between the two countries' currencies in recent years.

Which THREE of the following appear to be be valid justifications of this diversification decision?

A.

The diversification will give Company A protection from political risk

B.

The diversification into another product market will lower business risk

C.

The diversification will give Company A greater protection from transaction risk.

D.

The diversification will give Company A greater protection from translation risk

E.

The diversification will enable Company A to enjoy production scale economies

CIMA F3 Summary

  • Vendor: CIMA
  • Product: F3
  • Update on: Jul 29, 2025
  • Questions: 435
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