1. In general, business alliances are not intended to become permanent arrangements. All of the following are common reasons for terminating such arrangements except for

1. Diverging objectives of the partners
2. Successful operations resulting in merger of the partners
3. Completion of the project
4. Unexpectedly favorable financial performance
5. Antitrust considerations

2. Which of the following is generally not true of a business alliance?

1. Tax considerations are often the primary motivation for forming the alliance
2. The events triggering dissolution of the alliance are generally spelled out
3. Remaining partners have a right of first refusal if one partner chooses to exit the partnership
4. One partner is generally responsible for day-to-day operations
5. Allocation of profits and losses follow from the allocation of shares or partnership interests

3. Autos R Us and Pre-owned Inc represent used car dealers that compete in the same city. These competitors each invest $15 million to form a new, jointly owned company, Real Value Inc, that will sell cars in a nearby city. The new firm is best described by which of the following terms:

1. Merger
2. Acquisition
3. Leveraged buyout
4. Joint venture
5. Consolidation

8. 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