The following are advantages of spin-offs:
I. they widen investor choice by allowing them to invest in just one part of the business.
II. they can improve incentives for managers.
III. by spinning of businesses with "poor fit" parent firms can concentrate on its main activities.
IV. they relieve investors of the worry that funds will be siphoned off from one business to support unprofitable capital investments in another.
A) I and II only
B) I, II and III only
C) I, II, III and IV
D) III and IV only

Question

Quizplus · Accepted Answer

All of the advantages listed are true for spin-offs. They provide investors with a wider range of investment options, create more focused incentives for managers, allow parent firms to concentrate on their core businesses, and alleviate concerns about capital allocation. Therefore, choice C is the correct answer.

The Following Are Advantages of Spin-Offs