An Arm's-Length Transaction Is One in Which

question 49

Multiple Choice

An arm's-length transaction is one in which:

• A) the parties owe each other a special duty of confidentiality.
• B) the buyer does not know the identity of the seller.
• C) the parties are acting in their own self-interest.
• D) the parties do not meet in person to conduct the transaction.

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Definitions:

Equity Interest

Ownership interest in a company, typically represented by stocks, indicating the holder's stake in the company's assets and earnings.

Cash Dividend

A payment made by a company out of its profits to its shareholders, usually in cash.

Net Income

The net income of a company once all costs and taxes are deducted from its total revenue.

Short-Term Stock Investments

Investments in stocks that are intended to be held for a short period, typically less than one year, for earning quick profits.