Holding Companies and Parent Companies Quiz

What is a holding company?

• A company that produces goods or services

• A company that manages day-to-day operations

• A company that invests in other firms

• A company that owns subsidiaries

What is a parent company?

• A company that has ownership of other company / companies

• A company that is managed by others

• a company controlled by a holding company

• A company that operates as a sole proprietorship

What are the businesses owned by holding and parent companies called?

• Partners

• Suppliers

• Competitors

• Subsidiaries

What is a wholly owned subsidiary?

• A subsidiary that is fully owned by the holding or parent company

• A subsidiary that is owned by a different industry

• A subsidiary that is partially owned by the holding or parent company

• A subsidiary that is owned by multiple holding or parent companies

What distinguishes holding companies from mutual funds and hedge funds?

• Holding companies have minority stakes in companies

• Holding companies have overall control of the subsidiary

• Holding companies are short-term traders

• Holding companies don't have tax benefits

Which of the following is an example of a holding company?

• Facebook

• Google

• Whole Foods

• Berkshire Hathaway

What is one of the benefits of organizing a business as a holding company?

• Reduced risk of liability

• Limited diversification

• Higher borrowing costs

• Higher taxes

What type of companies are JP Morgan Chase and Goldman Sachs?

• Holding companies

• Parent companies

• Operating companies

• Mutual funds

What is one of the limits of holding companies?

• Ownership of sole proprietorships

• Ownership of S corporations

• Involvement in day-to-day management

• Direct management of subsidiaries

Why do some wealthy families form holding companies?

• To simplify inheritance bequests

• To reduce diversification

• To increase taxes

• To manage day-to-day operations