When a Firm Distributes Shares in a Subsidiary to Its

question 21

Multiple Choice

When a firm distributes shares in a subsidiary to its existing stockholders on a pro rata basis,the firm is doing

• A)a reversal.
• B)a divestiture.
• C)an equity carve-out.
• D)a spin-off.
• E)a split-up.

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Definitions:

Risk of Conflict

The potential for disagreements, disputes, or confrontations to arise between individuals or groups.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution, due to constraints.

Systematic Evaluation

A structured process of assessing the performance, effectiveness, or quality of a system, program, or project using specific criteria and methodologies.

Escalation of Commitment

A behavioral pattern where individuals or groups continue to invest in a decision despite new evidence suggesting that the decision was wrong.