Question

When an investor owns less than 20 percent of the investee company, the investor may still...

When an investor owns less than 20 percent of the investee company, the investor may still be able to exert influence over the investee company if the other stock is:

Multiple Choice

  • widely distributed across a large number of individual investors.

  • widely distributed across a few investors.

  • controlled a small group of investors.

  • closely held by a few investors.

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Answer #1

Answer : Correct option is widely distributed across a large number of individual investors.

Reason :

A person can obtain control or exert influence either by holding majority shares , or by having Contractual right or one more way is even when the investor is not a majority shareholder but still the investor is able to exert influence over the investee company if the remaining shares are widely distributed across a large number of individual investors having no connection with each other.Therefore Correct option is widely distributed across a large number of individual investors

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