When a Company Invests in Equity Securities with 20% or More

question 60

True/False

When a company invests in equity securities with 20% or more, but less than 50%, ownership in the investee's voting stock, the investor can significantly influence the investee's decisions.

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Definitions:

Treasury Bill

Short-term, government-issued debt securities that mature in one year or less.

Par

The face value of a bond or other security, which is the amount the issuer promises to repay at maturity.

Dollar-Weighted Return

A measure of an investment's return, taking into account the timing and size of cash flows into and out of the investment.

Internal Rate of Return

An estimate of the profitability of potential investments, calculated as the rate of return that sets the net present value of all cash flows (both positive and negative) from the investment equal to zero.