Assume that RSF is a wholly owned subsidiary of the Rolled Steel Company. RSF provides credit financing solely for large ticket items purchased from the Rolled Steel Company. Which one of the following terms describes RSF?
A) Credit department
B) Parent company
C) Captive finance company
D) Credit union
E) Service unit

Question

Quizplus · Accepted Answer

The given scenario describes a captive finance company, which is a subsidiary of a larger company that provides financing exclusively for the products or services of the parent company. RSF is providing credit financing for large ticket items purchased from its parent company, Rolled Steel Company. Therefore, choice C, captive finance company, is the correct answer. Option A, credit department, is not a suitable choice as RSF operates as a subsidiary and not simply as a department within Rolled Steel Company. Option B, parent company, is incorrect as it refers to Rolled Steel Company, which is the parent company of RSF. Option D, credit union, is not the correct choice as they are member-owned and not usually affiliated with a specific parent company. Option E, service unit, is not appropriate as RSF is providing credit financing and not a specific service.

Assume That RSF Is a Wholly Owned Subsidiary of the Rolled