Consolidation Might Not Be Appropriate Even When the Majority Owner

question 16

Multiple Choice

Consolidation might not be appropriate even when the majority owner has control if:

• A)​The subsidiary is in bankruptcy.
• B)​A manufacturing-based parent has a subsidiary involved in banking activities.
• C)​The subsidiary is located in a foreign country.
• D)​The subsidiary has a different fiscal-year end than the parent.

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Definitions:

Call Protection

An initial period during which a callable bond may not be called.

Conversion Feature

An option within certain bonds or preferred stocks that allows them to be converted into a predetermined amount of the issuer's common stock.

Dividend Yield

The annual dividend payments to shareholders expressed as a percentage of the stock's current price.

Yield-To-Maturity

The total return anticipated on a bond if it is held until it matures, including all payments from interest and principal, calculated as an annual rate.