Choice "A" is correct. Under Rule 101 of the Code of Conduct, independence is impaired with an audit client if the auditor has a direct financial interest regardless of materiality, or a material indirect financial interest in the client. A joint, closely-held business investment with the client that was material would be a clear violation.
Choice "b" is incorrect because an immaterial indirect financial interest is permissible.
Choice "d" is incorrect because fully collateralized auto loans with financial institution clients are permissible.
Choice "c" is incorrect. Although such a loan made today would impair independence, there is an exception made for such loans executed prior to February 5, 2001.