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:

Somatic Nervous System

The part of the peripheral nervous system that handles voluntary control of body movements through control of skeletal muscles.

Endocrine System

A network of glands in the body that produce and release hormones directly into the bloodstream to regulate the body's growth, metabolism, and sexual development and function.

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord, responsible for connecting the central nervous system to limbs and organs.

Central Nervous System

The part of the nervous system that consists of the brain and spinal cord, responsible for processing and sending out information to the rest of the body.