Matt Owns a Car Dealership That Is Very Profitable

question 22

Multiple Choice

Matt owns a car dealership that is very profitable.Since he plans to retire in 5-10 years,Matt has decided to retain ownership for now,but without continuing to grow the business.This change would also allow him to invest for retirement some of the cash that the business is now generating.Which harvesting method does this example illustrate?

• A)A delayed sellout
• B)A strategy to release the firm's free cash flows to the owners
• C)Offering stock to the public through an IPO
• D)Issuing a private placement of stock

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Definitions:

Third Quartile

The value below which 75% of the data fall, often represented as Q3 in statistics.

First Quartile

The 25th percentile of a data set, below which lies 25% of the data.

Skewness

A measure of the shape of a data distribution. Data skewed to the left result in negative skewness; a symmetric data distribution results in zero skewness; and data skewed to the right result in positive skewness.

Skewed Right

A distribution of data where most values are concentrated on the left side, with the tail extending to the right.