All of the Following Are True Regarding an Investing Company

question 76

Multiple Choice

All of the following are true regarding an investing company which holds more than 50% of the ordinary shares of an investee except

• A) the investee is known as an affiliate.
• B) the investor has a controlling interest in the investee.
• C) the investor is known as the parent company.
• D) consolidated financial statements are generally required.

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Definitions:

Privately Placed Bonds

Bonds that are sold directly to a small group of investors instead of being offered to the general public, often to avoid the costs and regulations of a public offering.

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a specified price before a certain date.

Employee Options

A form of employee benefit that gives employees the right to purchase company stock at a set price at a future date.

Debt Options

Financial instruments giving the holder the right, but not the obligation, to deal with debt under specified conditions.