How does a Holding Company Work?

When investing in securities issued by corporations, you may have come across a term called a holding company. While you might wonder what it is, you would be surprised to know that most successful companies in the world are holding companies. A holding company is a parent corporation that holds various businesses under it. Such a company does not do anything by itself, but instead, it is designed to hold investments in the form of stocks, bonds, mutual funds, gold, silver, real estate, trademark, patents, licenses, copyrights, or anything of value. A holding company holds enough investment in other entities to manage and control them.

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