Question

24 K M N 25 7. Ajax Paper Company buys the Vermont Tree Farm to insure the continual supply of pulpwood for the paper mill is an example of: 26 27 a) Conglomerate 28 b) Forward Vertical combination 29 ) Horizontal combination 30 d) Backward Vertical combination 31 8. If the Rocky Company buys 35% of the voting stock of the Mountain Company this would be 32 which level of investment ownership: 33 34 a) Controlling 35 b) Passive 360) Persuasive 37 d) Influential 38

Answer 1

7.d. Backward vertical combination.

The tree farm is supplier of raw material to Ajax paper company.

Buying of a supplier will result in backward vertical integration.

Conglomerate merger happens when an unrelated business is bought.

Forward vertical combination happens when a distribution company is purchased.

Horizontal combination happens when a competetor is purchased.

8.d. influential.

Since the ownership lies between 20% - 50%. it can be said as an influential ownership.

If it is more than 50%, it can be said as controlling owneship.

If it is less than 20% it can be called as passive.