Conglomerate investments usually are rated as low risk because foreign governments see them as providing fewer benefits to a multinational company and greater benefits to the country than other investments. True or false?

Question

Business

Carina Madden

10 February, 19:08

Conglomerate investments usually are rated as low risk because foreign governments see them as providing fewer benefits to a multinational company and greater benefits to the country than other investments. True or false?

+1

Answers (1)

Know the Answer?

Tony Villarreal · Answer 1

FALSE

Explanation:

It is untrue that Conglomerate investments usually are rated as low risk because foreign governments see them as providing fewer benefits to a multinational company and greater benefits to the country than other investments.

Rather,

In accordance to financial theory and risk diversification, because conglomerates involve in numerous businesses, diversification results in reduced investment risk, such that a downturn suffered by one subsidiary, for instance, can be counterbalanced by stability, or even expansion, in another venture.