Fleet, Inc. owns 85% of the stock of Pete, Inc. and 35% of the stock of Zete, Inc. and 90% of the stock of Bete, Inc. Bete owns 5% of the stock of Pete and 5% of the stock of Zete. Zete owns 10% of the stock of Bete. The remaining stock of Pete and Zete is owned by unrelated individuals. Which of the following statements is correct?

Question

Quizplus · Accepted Answer

An affiliated group is a group of corporations linked through stock ownership in a parent-subsidiary relationship. Fleet owns 85% of Pete and 35% of Zete, making them both subsidiaries of Fleet. Additionally, Fleet owns 90% of Bete, making Bete a subsidiary of Fleet as well. Bete owns 5% of Pete and 5% of Zete, which means that Pete and Zete have a minority ownership relationship with Bete. Zete also owns 10% of Bete, creating another subsidiary relationship. Therefore, Fleet, Pete, and Bete are an affiliated group. Zete is also a subsidiary of Fleet but is not included in this group because it does not have ownership in either Pete or Bete.