Question

Last​ year, ABC and NBC came together to create a new company called​ XYZ, which is legally separate and distinct from both ABC and NBC. XYZ is an example of​ _____.

A) Joint Venture
B) Merger
C) Acquisition
D) Subsidiary

Answer 1

When ABC and NBC formed a new company called XYZ, it represented a Joint Venture, which is a business arrangement where two or more parties collaborate to achieve a specific goal while creating a new entity.

Step-by-step explanation:

Last year, when ABC and NBC came together to create a new company called XYZ, this is an example of a Joint Venture. In a joint venture, two or more parties agree to pool their resources for the purpose of accomplishing a specific task, in this case, forming a new entity that is legally separate and distinct from the parent companies. This is different from a merger, where two companies become a single firm, or an acquisition, where one company purchases another, and may continue to operate under its former name. The case of XYZ does not represent a merger because the companies did not combine to become a single firm, nor is it an acquisition, as one company has not purchased the other, nor is it a subsidiary since it's a separate entity created by both parent companies.