A Parent Corporation Will Be Liable to Creditors of a Subsidiary

question 45

Multiple Choice

A parent corporation will be liable to creditors of a subsidiary corporation

• A)only if the parent corporation and the subsidiary corporation have exactly the same directors.
• B)only if the subsidiary corporation is a private (non-distributing)corporation.
• C)only if the parent corporation owns more than 50 percent of the shares in the subsidiary corporation.
• D)only if the parent corporation owns 100 percent of the shares in the subsidiary corporation.
• E)none of the above

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Definitions:

Equilibrium Price

The rate in the marketplace at which the volume of goods being offered is the same as the volume of goods being sought.

Equilibrium Quantity

The quantity of a good or service at which demand meets supply.

Supply Decreases

A situation in which the quantity of a product or service offered in the market declines due to various factors like increased production costs or reduced number of suppliers.

Invisible Hand Concept

A term coined by Adam Smith to describe the self-regulating nature of the marketplace, guiding individuals to contribute to economic activities that benefit society.