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

question 24

Multiple Choice

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

• A)A spin-off 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.
• E)A spin-off results in a higher price for the subsidiary.

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Definitions:

Group Perspective

The collective viewpoint or attitude of a group, shaped by the members' shared beliefs, experiences, and goals.

Sociology

The study of human society and social behavior, including the origins, development, and structures of human interactions and institutions.

Psychology

The scientific study of the mind and behavior, covering various aspects of human experience, including thoughts, emotions, and actions.

Psychological Perspective

An approach to understanding human behavior and mental processes that involves examining psychological concepts and principles.