The Following Are Advantages of Spin-Offs

question 44

Multiple Choice

The following are advantages of spin-offs:
I. they widen investor choice by allowing them to invest in just one part of the business.
II. they can improve incentives for managers.
III. by spinning of businesses with "poor fit" parent firms can concentrate on its main activities.
IV. they relieve investors of the worry that funds will be siphoned off from one business to support unprofitable capital investments in another.

• A) I and II only
• B) I, II and III only
• C) I, II, III and IV
• D) III and IV only

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Definitions:

Conditional Contract

A contract that becomes enforceable only upon the occurrence of certain conditions or the performance of a particular act.

Implied Conditions

Terms and stipulations that, although not expressly stated, are understood to be part of a contract based on the nature of the transaction.

Complete Performance

Contract performance that occurs when all aspects of the parties’ duties under the contract are carried out perfectly.

Substantial Performance

Refers to a situation where a party has completed most of a contract's terms, fulfilling enough of the contract to warrant payment, though some minor elements may still be needed.