Identify the Correct Statement About an Arm's-Length Transaction

question 1

Multiple Choice

Identify the correct statement about an arm's-length transaction.

• A)It is a transaction involving a party that is controlled by another entity and does not act on its own behalf.
• B)It is a transaction made by parties as if they were unrelated,in a free market system,each acting in its own best interest.
• C)It is a transactions in which one party sets aside independent interest so as to focus on the wishes of the controlling party.
• D)An arm's-length transaction should involve at least one interested party that is concerned about the probable consequences of the transaction.
• E)A transaction involving subsidiaries would not be considered an arm's-length transaction because the parties are acting independently.

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Definitions:

Third-Party Payments

Transactions where a person or entity makes a payment on behalf of another, often seen in healthcare insurance.

Third Party

An entity that is not directly involved in a transaction but may be affected by it or has a peripheral interest.

Economic Price

The monetary value assigned to goods and services determined by factors such as supply and demand in the marketplace.

Consumers

Individuals or groups who purchase goods and services for personal use.