Parent Limited Has an 80% Ownership Interest in Subsidiary One

question 3

Multiple Choice

Parent Limited has an 80% ownership interest in Subsidiary One Limited.Subsidiary One Limited has a 65% ownership interest in Subsidiary Two Limited.As a result of these ownership interests,there is a direct ownership interest in Subsidiary Two Limited amounting to:

• A)52%;
• B)48%;
• C)35%;
• D)13%.

---

Definitions:

Listed Call Option

An option that gives the holder the right, but not the obligation, to buy a specified amount of an underlying security at a specified price within a specified time period, traded on a formal exchange.

Exercise Price

The cost at which the possessor of an option is able to purchase (in the case of a call option) or dispose of (in the case of a put option) the underlying asset.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall market capitalization remains unchanged.

Call Option

An economic agreement that grants the buyer the option to acquire an asset such as a stock, bond, commodity, or similar at an agreed-upon price before a certain deadline, without being compelled to do so.