A Spin-Off May Create Shareholder Wealth for All of the Following

question 6

Multiple Choice

A spin-off may create shareholder wealth for all of the following reasons except for

• A) Spin-offs are generally not taxable if properly structured
• B) The spin-off's management and board is independent of the former parent
• C) Investors will be better able to value the spin-off
• D) The cost of capital of the spin-off is generally higher than when it was part of the parent
• E) The spin-off may be subsequently acquired by another firm

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Definitions:

Statistic

A numerical measure that describes an aspect of a sample of a population.

Antioxidants

Antioxidants are compounds that inhibit oxidation, a chemical reaction that can produce free radicals and chain reactions that may damage the cells of organisms.

Population Variances

The squared deviations of a population's values from the mean, indicating how widely the population data is spread out.

Pooled Proportion Estimate

A method to estimate the combined proportion of two or more groups by pooling their successes and trials.