Which of the Following Statements Is True Concerning Variable Interest

question 36

Multiple Choice

Which of the following statements is true concerning variable interest entities (VIEs) ? (1.) The role of the VIE equity investors can be fairly minor.
(2) ) A VIE may be created specifically to benefit the business enterprise that established it with low-cost financing.
(3) ) VIE governing agreements often limit activities and decision-making.
(4) ) VIEs usually have a well-defined and limited business activity.

• A) 2 and 4.
• B) 2, 3, and 4.
• C) 1, 2, and 4.
• D) 1, 2, and 3.
• E) 1, 2, 3, and 4.

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Definitions:

Supply Function

A mathematical relationship that describes the quantity of goods that producers are willing and able to sell at different prices.

Cost Function

A mathematical formula used to calculate the total cost incurred by a company to produce a given level of output.

Maximizing Profits

The process by which a company determines the price and production level that generates the most profit.

Capitalistic Firm

A business entity operating in a capitalist economy, where the means of production are privately owned and operated for profit.