Question

ESB Group is the parent company of many related businesses under its banner. Each share of the parent company is quoted at $220. However, if this had to be assessed by adding the stock prices of each of its strategic business units, the value would only be $200 per share. In this scenario, what has ESB Group created?

Answer 1

Answer:

diversification premium

Explanation:

In this scenario, ESB Group has created diversification premium.

Answer 2

Answer:

Diversification Premium

Explanation:

Companies that pursue related diversification are more likely to improve their performance. They create a diversification premium: the stock price of related-diversification firms is valued at greater than the sum of their individual business