BPM CorpIs a Manufacturer of Radar Systems for Regional-Sized Jet Aircraft

question 109

Multiple Choice

BPM Corp.is a manufacturer of radar systems for regional-sized jet aircraft.The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials.The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover.Which of the following ownership arrangements would be MOST typical for a joint venture?

• A) BPM will own more than 50 percent of the venture and a new company will be formed.
• B) J3 will own more than 50 percent of the venture and a new company will be formed.
• C) BPM and J3 will both own 50 percent of the venture and a new company will be formed.
• D) BPM and J3 will both own 50 percent of the venture but no new company will be formed.

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Definitions:

Weighted-Average Number

A calculation that takes into account the varying degrees of importance of the numbers in a data set, used to find a kind of average that considers weight.

Preferred Stock

A type of stock that grants holders priority for dividend payments and, in some cases, priority in asset liquidation over common stockholders.

Stockholders' Equity

The portion of the balance sheet that represents the capital received from investors in exchange for stock (paid-in capital), donated capital and retained earnings.

Cash Dividend

A payment made by a company out of its earnings to shareholders, usually in the form of cash.