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

question 71

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.

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Definitions:

Negative Symptoms

Characteristics associated with a reduction or lack of normal functions, often observed in certain mental health conditions, like schizophrenia.

Antipsychotic Drugs

Medications used to treat psychiatric conditions by helping to manage symptoms of psychosis, such as hallucinations and delusions.

Schizophrenia

A long-term mental disorder involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception and inappropriate actions.

Dopamine

A neurotransmitter in the brain associated with pleasure, movement, and the reward system.