Which of the following represents a disadvantage for holding companies?
A) relatively high dollar investment associated with it
B) increased risk resulting from the leverage effect
C) control of lesser amounts of assets than they could acquire through mergers
D) failure of one of the companies results in the failure of the entire holding company

Question

Quizplus · Accepted Answer

Holding companies often use leverage to acquire subsidiaries, which can increase financial risk if the subsidiaries do not perform well.

Which of the Following Represents a Disadvantage for Holding Companies