Which one of the following is generally not a reason for issuing tracking stocks?
A) To give investors a "pure play" in a specific business owned by the parent
B) To create a currency for the business to acquire other firms
C) To enhance the likelihood that the business will be acquired
D) To create an incentive for management receiving the stock
E) To raise capital for the parent or for the business for which the tracking stock is created

Question

Quizplus · Accepted Answer

Issuing tracking stocks is typically not done to enhance the likelihood of being acquired. The other options are all potential reasons for issuing tracking stocks. A tracking stock can give investors exposure to a specific business segment, provide a currency for acquisitions, incentivize management, and raise capital for the parent company or the specific business segment.

Which One of the Following Is Generally Not a Reason