Which of the Following Is an Advantage of a Spin-Off

question 21

Multiple Choice

Which of the following is an advantage of a spin-off versus selling a subsidiary and distributing the cash?

• A)Increases the transaction costs associated with selling the subsidiary.
• B)Shareholders must immediately pay capital gains taxes versus ordinary income taxes on the value of the spin-off.
• C)A spin-off guarantees a lower cost of capital.
• D)The spin-off is not taxed as a cash distribution.

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Definitions:

Psychological Disorders

Mental health conditions characterized by significant disturbances in thoughts, feelings, and behaviors.

DSM-5

DSM-5, the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, is a handbook for diagnosing mental disorders, published by the American Psychiatric Association.

Psychotherapist

A trained professional who employs psychological methods particularly in the treatment of mental illness, emotional challenges, and behavioral disturbances.

Psychological Disorders

Mental disorders characterized by patterns of behavior or thoughts that are significantly disruptive to one’s personal functioning.