I am studying acquisitions. And the instructor is asking What is the term differential used to indicate?

Can you be more specific? What type of acquisitions? (Remember that you're asking this out of the blue, out of context.)

The term differential is used to indicate the difference between the cost of the investment as recorded on the parent's books and the book value of the shares acquired based on the stockholders' equity accounts of the subsidiary.

Per my Advanced Financial Accounting textbook the answer is correct.

A differential indicates the difference between the cost of the investment recorded on the parent's books and the book value of the shares acquired on the subsidiary's books.