When the Manufacturer of a Product Creates a Wholly Owned

question 266

Multiple Choice

When the manufacturer of a product creates a wholly owned subsidiary to lease that product, the subsidiary is called a(n) :

• A) Independent lessee.
• B) Independent lessor.
• C) Captive lessee.
• D) Captive finance company.
• E) Captive direct lessor.

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Definitions:

Net Income

This is the total profit of a company after all expenses, taxes, and dividends have been subtracted from total revenue.

Voting Stock

Stocks that provide the holder with voting privileges regarding corporate policies and electing the board members.

Cash Dividend

A distribution of a company's earnings to its shareholders in the form of cash.

Passive Investment

An investment strategy involving minimal buying and selling actions, typically focused on long-term gains and avoiding frequent trading.