P Ltd owns 45% of the shares of S Ltd. P Ltd can appoint or remove four of the six directors on the board of S Ltd. Each director is entitled to one vote at the directors’ meeting. The decisions made at the directors’ meetings direct the relevant activities of S Ltd. Identify the correct options that reflect the control that P Ltd has in S Ltd. (i) P Ltd currently holds the majority of the voting rights (4/6 =66,6%) at the directors’ meeting.(ii)The voting rights that P ltd has give the current ability to use its majority vote at the directors’ meeting to direct the relevant activities of S Ltd.(iii) P Ltd is exposed to variable returns from S Ltd through dividends and the value of its investment in S Ltd. (iv) P Ltd has the ability to use its majority voting rights (power) at the directors’ meeting to affect its returns (through dividend policies, operating decisions, etc.). (v)P Ltd has no control over S Ltd because of the 45% shareholding. Select one: a. (i),(iii),(v) b. (i),(ii),(iii),(iv),(v) c. (ii),(iii), (iv) d. (i), (ii), (iii),(iv)
P Ltd owns 45% of the shares of S Ltd. P Ltd can appoint or remove four of the six directors on the board of S Ltd. Each director is entitled to one vote at the directors’ meeting. The decisions made at the directors’ meetings direct the relevant activities of S Ltd. Identify the correct options that reflect the control that P Ltd has in S Ltd. (i) P Ltd currently holds the majority of the voting rights (4/6 =66,6%) at the directors’ meeting.(ii)The voting rights that P ltd has give the current ability to use its majority vote at the directors’ meeting to direct the relevant activities of S Ltd.(iii) P Ltd is exposed to variable returns from S Ltd through dividends and the value of its investment in S Ltd. (iv) P Ltd has the ability to use its majority voting rights (power) at the directors’ meeting to affect its returns (through dividend policies, operating decisions, etc.). (v)P Ltd has no control over S Ltd because of the 45% shareholding. Select one: a. (i),(iii),(v) b. (i),(ii),(iii),(iv),(v) c. (ii),(iii), (iv) d. (i), (ii), (iii),(iv)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
P Ltd owns 45% of the shares of S Ltd. P Ltd can appoint or remove four of the six directors on the board of S Ltd. Each director is entitled to one vote at the directors’ meeting. The decisions made at the directors’ meetings direct the relevant activities of S Ltd. Identify the correct options that reflect the control that P Ltd has in S Ltd. (i) P Ltd currently holds the majority of the voting rights (4/6 =66,6%) at the directors’ meeting.(ii)The voting rights that P ltd has give the current ability to use its majority vote at the directors’ meeting to direct the relevant activities of S Ltd.(iii) P Ltd is exposed to variable returns from S Ltd through dividends and the value of its investment in S Ltd. (iv) P Ltd has the ability to use its majority voting rights (power) at the directors’ meeting to affect its returns (through dividend policies, operating decisions, etc.). (v)P Ltd has no control over S Ltd because of the 45% shareholding.
Select one:
a. (i),(iii),(v)
b. (i),(ii),(iii),(iv),(v)
c. (ii),(iii), (iv)
d. (i), (ii), (iii),(iv)
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