When the Parent Company Fully Responsible for the Subsidiary's Obligations

question 77

Multiple Choice

When the parent company fully responsible for the subsidiary's obligations,

• A)the independent financial structure of the subsidiary is irrelevant.
• B)potential creditors will examine the parent's overall financial condition, not the subsidiary's.
• C)the independent financial subsidiary can have the same capital structure as the parent.
• D)all of the above

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Definitions:

Oligopsony

Market with only a few buyers.

Buying Price

The price at which a good or service is purchased by a consumer or another business.

Marginal Value Curve

The marginal value curve represents how the value of the last unit consumed (marginal value) changes as the quantity consumed increases.

Marginal Expenditure

The extra expense that results from acquiring or making an additional unit of a product or service.