Which of the following statements is not correct regarding strategic investments?
A)They are purchased with the purpose of influencing the investee company.
B)They are generally classified as investments in associates.
C)They are frequently debt securities.
D)The degree of influence determines how a strategic investment is classified.

Question

Quizplus · Accepted Answer

Strategic investments are typically made to gain a significant influence or control over the operations of the investee company, and they are often in the form of equity securities, not debt securities. Investments in associates or acquiring a substantial stake in another company to exert influence are common examples, which contrasts with the purpose of debt securities that primarily aim to earn interest income without necessarily influencing the company's operations.

Which of the Following Statements Is Not Correct Regarding Strategic