A(n) __________ Occurs When One Firm Buys a Controlling, or 100

question 40

Multiple Choice

A(n) __________ occurs when one firm buys a controlling, or 100 percent interest, in another firm.

• A) merger
• B) acquisition
• C) spin-off
• D) restructuring

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Definitions:

Voting Common Stock

Shares of common stock that grant the holder the right to vote on company matters, such as electing the board of directors.

Book Value

The company's net asset value as shown on the balance sheet, determined by subtracting intangible assets and liabilities from total assets.

Net Loss

The result when a company's total expenses exceed its total revenues during a specific period, indicating a negative profit.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, without having full control over it, typically implicated by ownership of 20% to 50% of voting shares.