Which of the Following Statements Is True

question 75

Multiple Choice

Which of the following statements is true?

• A) When a firm performs a spin-off the total stock value of the parent firm should drop by approximately the market value of the new public spin-off.
• B) A reverse LBO is also known as a second IPO.
• C) Tracking stocks are designed to track the earnings of wholly-owned subsidiaries.
• D) all of the above statements are true
• E) Only statements (a)and (c)are true.

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Definitions:

Cov (x,y)

Represents the covariance between two variables \(x\) and \(y\), measuring how changes in one variable are associated with changes in another.

Covariance

A statistical measure that indicates the extent to which two variables change together; if the greater values of one variable mainly correspond with the greater values of the other variable, and the same holds for the lesser values, the covariance is positive.

Slope

A measure of the steepness or incline of a line, representing the ratio of the change in the y-value to the change in the x-value.

Coefficient of Correlation

A statistical measure that computes the strength and direction of a linear relationship between two variables.