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Equity securities in which the investor owns less than 20% ownership in the voting stock of the investee generally can be cla
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Answer #1

The answer is

B. NO SIGNIFICANT INFLUENCE

Reason : Why other 3 options are not right answer :

Held to maturity : Equity ownership doesn't have specific maturity date as Debt instrument. Equity shares can be held forever (till liquidation) or can be sold anytime. Hence this option doesn't satisfy classification of equity shares.

Controlling Interest : This situation is when investor holds more than 50% of ownership in voting rights. This is also called as holding majority of shares of entity. This option also doesn't satisfy classification of equity shares as per question.

SignificantIInfluence : If a investor holds more than 20% ownership in voting rights, it is called as 'Significant influence'. Significant influence is power to participate in decisions of financial and operational policy. This option also doesn't satisfy classification of equity shares as per question.

Thus a investor who holds less than 20% shares called as 'No significant influence'. These holdings are classified as 'Investment'.

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