A Wholly Owned Subsidiary Whose Primary Purpose Is to Finance

question 18

Multiple Choice

A wholly owned subsidiary whose primary purpose is to finance sales of the parent company's products and services, provide wholesale financing to distributors of the parent company's products, and purchase receivables of the parent company is a

• A)captive finance subsidiary.
• B)factor.
• C)leasing agent.
• D)captive factoring agent.

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Definitions:

Treasury Stock

Shares that were once in circulation but were bought back by the issuing company, decreasing the amount of stock outstanding.

Par Common Stock

The nominal or face value assigned to a share of common stock by the company's corporate charter.

Fair Market

The price at which an asset would change hands between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts.

Total Assets

The total value of everything a company owns, encompassing both current assets and long-term assets.