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Economic diversity or economic diversification refers to variations in the economic status or the use of a broad range of economic activities in a region or country. [1] Diversification is used as a strategy to encourage positive economic growth and development. [ 2 ]
Similarly, diversification can manage price risk, on the assumption that not all products will suffer low prices at the same time. In fact, farmers often do the opposite of diversification by planting products that have a high price in one year, only to see the price collapse in the next, as explained by the cobweb theory. External threats ...
Therefore, the market penalizes a multi-division firm and attaches a lower multiple to its earnings and cash flows, thus creating the discount. However, the opposite concept, called conglomerate premium, also exists. [2]
Diversification could cost more: Fewer investments can be safer and more profitable than spreading money thinly across many. Yes, diversification can potentially limit portfolio losses, but only ...
Image source: Getty Images. PepsiCo's strength is its diversification. PepsiCo is a highly diversified food and beverage business. Besides its flagship Pepsi soda brand, it owns a variety of other ...
Correlation refers to the degree to which stock and bond returns move in the same direction, or the opposite direction, to each other. The beauty of asset allocation and diversification is that ...
Keynes came to recognize the importance, "if possible", he wrote, of holding assets with "opposed risks [...] since they are likely to move in opposite directions when there are general fluctuations" [27] Keynes was a pioneer of "international diversification" due to substantial holdings in non-U.K. stocks, up to 75%, and avoiding home bias at ...
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