A spin-off may create shareholder wealth for all of the following reasons except for

1. Spin-offs are generally not taxable if properly structured
2. The spin-offs management and board is independent of the former parent
3. Investors will be better able to value the spin-off
4. The cost of capital of the spin-off is generally higher than when it was part of the parent
5. The spin-off may be subsequently acquired by another firm

An equity carve-out differs from a spin-off for all but which one of the following reasons?

1. Generates a cash infusion into the parent
2. Is undertaken when the unit has very little synergy with the parent
3. The proceeds often are taxable to the parent
4. Continues to be influenced by the parents management and board
5. The carve-outs shareholders may differ from those of the parents shareholders

Which one of the following is generally not a reason for issuing tracking stocks?

1. To give investors a pure play in a specific business owned by the parent
2. To create a currency for the business to acquire other firms
3. To enhance the likelihood that the business will be acquired
4. To create an incentive for management receiving the stock
5. To raise capital for the parent or for the business for which the tracking stock is created