If a Company Owns 90 Percent or More of a Subsidiary's

question 76

Multiple Choice

If a company owns 90 percent or more of a subsidiary's stock, a merger may be effected with approval of the parent's board of directors alone, without resort to shareholders. This is called a:

• A) parent-sub merger.
• B) board merger.
• C) short-cut merger.
• D) short-form merger.

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Definitions:

Own Capital

The personal wealth or assets invested in a business by its owners.

Long-Run

A period of time in which all factors of production and costs are variable, allowing for complete adjustment to change.

Market Entry

The process by which a company or business begins to participate in a new market, facing existing competitors and regulations.

Normal Return

The minimum profit necessary for a company to remain viable in its industry, often considered the opportunity cost of capital.