In case of spin-offs:
A) Shares of the new company are given to shareholders of the parent company
B) Shares of the new company are sold as a public offering
C) Shares of the new company are bought by borrowing or issuing junk bonds
D) None of the above

Question

Quizplus · Accepted Answer

In a spin-off, shares of the new company are usually distributed as a dividend to existing shareholders of the parent company. This means that shareholders of the parent company will receive shares of the new company without needing to buy them in a public offering or through borrowing or issuing bonds.

In Case of Spin-Offs