Question

Investments in which an investor cannot significantly influence or control the operations of the investee company are called:

-Business combination.

-Non-strategic investments.

-Investments in associates.

-Joint arrangements.

-Strategic investments.

Answer 1

Investments in which an investor cannot significantly influence or control the operations of the investee company are called as Non Strategic Investments.

Let us have an understanding of each of the terms given:

(1) Business Combination: In case of Business Combination, a company acquires another company. So control exists

(2) Non Strategic Investments: In case of Non- strategic investments, the company does not have a fixed action plan. It is temporary investments for maximizing interest of Stakeholders.

(3) Investments in associates: A Company is said to be associate of another company only if it can exhibit significant influence over the operations of associate company.

(4) Joint Arrangements:  A joint arrangement is an arrangement of which two or more parties have joint control.

(5) Strategic Investments: A strategic investment is a transaction that is closely related to joint ventures. In strategic investments, one company makes an investment in another. Hence Significant influence / control exists.

Therefore, we can conclude that Non strategic Investments are the investments which don't contain any control (or) significant influence