In financing a national subsidiary, a parent company issues shares held by itself, the regional headquarters and other corporate entities. This form of financing is:
A) Debt options using external financing
B) Equity options using external financing
C) Equity options using internal financing
D) Debt options using internal financing

Question

Quizplus · Accepted Answer

This form of financing involves the parent company using its own shares (an equity instrument) to finance the subsidiary, which means it is using internal resources rather than seeking external funding. Thus, it is classified as equity options using internal financing.

In Financing a National Subsidiary, a Parent Company Issues Shares