In a Situation Where a Parent Acquires Shares in a Subsidiary

question 25

Multiple Choice

In a situation where a parent acquires shares in a subsidiary, and the subsidiary later acquires a controlling interest in another entity, the ownership structure is:

• A) ordered.
• B) random.
• C) sequential.
• D) non-sequential.

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Definitions:

External Costs

Costs of a transaction or activity that affect third parties who did not choose to incur that cost, often seen in environmental pollution.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product for which there are many substitutes.

External Benefit

A benefit that people other than the consumer or producer enjoy, resulting from a transaction or activity.

Economic Efficiency

A condition in which all available resources are utilized in the most effective manner to satisfy society's needs and wants, minimizing waste and maximizing value.