If a Subsidiary Has Both Common and Preferred Stock Outstanding

question 33

Multiple Choice

If a subsidiary has both common and preferred stock outstanding, a parent must own a controlling interest in:

• A) both the subsidiary's common and preferred stock to justify consolidation.
• B) the subsidiary's common stock to justify consolidation.
• C) the subsidiary's common stock and at least 20% of the subsidiary's preferred stock to justify consolidation.
• D) the subsidiary's common stock and more than 50% of the subsidiary's preferred stock to justify consolidation.

---

Definitions:

Trade Deficit

A situation where a country's imports exceed its exports, leading to net outflow of domestic currency to foreign markets.

Exports

Goods or services sent from one country to another for sale or trade, contributing to a country's economy.

Imports

Goods or services brought into one country from another for the purpose of sale.

Comparative Advantage

A principle that states a country should produce goods and services at a lower opportunity cost than its trade partners.