Guaranteed Debt of Unconsolidated Subsidiaries Should Generally Be Ignored When

question 75

True/False

Guaranteed debt of unconsolidated subsidiaries should generally be ignored when analyzing the long-term solvency of a parent company, as subsidiaries are separate legal entities.

---

Definitions:

Call Option

A financial contract that gives the purchaser the right, but not the obligation, to buy an asset at a predetermined price before or at the expiration date.

Put Option

A financial contract giving the option holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period.

Stock Price

The cost per share at which a company's stock is bought and sold in the stock market.