Why is ABC's move into e-waste diversification?

• A. It remains in its original activity only.
• B. It reduces its asset base.
• C. It increases construction output.
• D. It has moved into recovering precious metals from electronic waste, a different business activity.

Answer: (D)

Diversification means expanding into a new product area or market to spread risk beyond the existing business. Moving into recovering precious metals from electronic waste fits that idea because it’s a different line of business from ABC’s current activities. It creates a new revenue stream and reduces dependence on the original operations.

That’s why this choice is best: staying in the original activity wouldn’t diversify. Reducing the asset base doesn’t describe expanding into something new, and aiming to increase construction output points to a different industry altogether. So entering e-waste recovery, a distinct business activity, embodies diversification.