A firm decides to distribute all of the shares it holds in a subsidiary to its shareholders. The distribution would be called a
A) Divestiture
B) Split-up
C) Spin-off
D) Split-up.
E) Equity carveout

Question

Quizplus · Accepted Answer

A distribution of shares in a subsidiary to the parent company's shareholders is called a spin-off. Divestiture usually refers to selling off an entire division or subsidiary, while a split-up involves breaking a company into smaller entities. An equity carveout involves selling a portion of a subsidiary's shares to the public while retaining control.

A Firm Decides to Distribute All of the Shares It