Which of the following is not true of a spin-off?
A) Creates cash infusion for parent
B) Change in equity ownership of the spin-off
C) New legal entity created
D) New shares issued to the public
E) A, B, and D

Question

Quizplus · Accepted Answer

A spin-off typically involves distributing shares of the new entity to the parent company's shareholders, not creating a cash infusion for the parent. There is a change in equity ownership as shareholders of the parent company receive shares in the new entity. A new legal entity is indeed created, and new shares are issued, but not necessarily to the public; they are distributed to the existing shareholders of the parent company.

Which of the Following Is Not True of a Spin-Off