A Parent Company Chooses to Acquire Only a 65% Interest

question 33

Multiple Choice

A parent company chooses to acquire only a 65% interest in its subsidiary. Which of the following is not a reason why the parent would choose to acquire less than a 100% interest in a subsidiary?

• A)Reduction of ownership risk
• B)Potential for increased share dilution
• C)Maintenance of a market for the subsidiary's shares
• D)Potential links to government support and management expertise through the NCI

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Definitions:

Universalization Test

A principle in ethics that evaluates the morality of actions based on their applicability to all individuals in similar situations.

Sarbanes-Oxley Act

A U.S. law enacted to protect investors by improving the accuracy and reliability of corporate disclosures.

Financial Reports

Detailed records of a company or organization's financial health, performance, and cash flows over a specific period.

Public Disclosure

The act of making information or data known to the public, especially in contexts requiring transparency and accountability.