Reference no: EM132020441

1. The following are common reasons cited for selling off prior acquisitions:

A. Poor fit.

B. Poor performance.

C. Cash flow needs.

D. All of the above. 3 points

2. In the United States, in order for a spinoff to be non-taxable, the following must be the case:

A. Both the parent company and the spun-off entity must be in business for at least Fve years before the restructuring.

B. The subsidiary must be at least 80% owned by the parent company.

C. The parent company and the spunoff entity must be in the same industry.

D. Both a and b.

3. An equity carve out is different than a spinoff because. ...

A.....the shareholder base does not change. .....

B. it brings in new capital.

C....it is much cheaper to implement.

D. None of the above. 3 points

4. In general, a selloff. ...

A....decreases the wealth of the parent company.

B. ...increases the wealth of the parent company.

C....has no related impact on shareholder wealth.

D....increases the price of the stock some time after the selloff date.