Stock markets apply a "conglomerate discount" of 20% on unrelated diversified firms. This means that investors A B C D 8 understand that the financial efficiencies of this strategy automatically make these stocks worth 20% more than their current market valuation believe that the value of conglomerates is 20% less than the value of the sum of their parts discount the expected future earnings of conglomerates by 20% have found that over time, conglomerates earn 20% more than the component companies would have earned independently