Certified Valuation Analyst (CVA) Practice Exam

The ability to set company policy and appoint management reflects what type of ownership interest?

1. Minority Interest

2. Marketable Interest

3. Controlling Interest

4. Dissolvable Interest

The correct answer is: Controlling Interest

The ability to set company policy and appoint management is indicative of a controlling interest in a company. A controlling interest is typically held when an individual or entity owns a sufficient number of shares to influence or dictate corporate decisions and governance. This level of ownership allows for strategic control, enabling the owner to guide the company's direction through decision-making at the board level and beyond. In contrast, a minority interest does not provide the ability to control company policies or appoint management, as it represents ownership of less than 50% of the company’s shares. Marketable interest relates to the ease with which shares can be bought and sold in the market, rather than control over corporate policies. Dissolvable interest would not pertain to controlling authority but rather to the ability to liquidate or dissolve a partnership. Therefore, the attributes associated with a controlling interest distinctly empower ownership over company management and policy.