A form of divestiture in which an operating unit becomes an independent company by issuing shares in it on a pro rata basis to the parent company's shareholders is called ________.
A) leveraged buyout
B) employee stock option
C) spin-off
D) strategic takeover

Question

Quizplus · Accepted Answer

A spin-off is a form of divestiture where an operating unit becomes an independent company by issuing shares in it on a pro rata basis to the parent company's shareholders. A leveraged buyout is a type of acquisition where the acquiring company uses significant amounts of debt to finance the transaction. An employee stock option is a benefit given to employees that allows them to purchase company stock at a discounted price. A strategic takeover is a type of acquisition in which an acquiring company takes over a target company to gain a strategic advantage.

A Form of Divestiture in Which an Operating Unit Becomes