1. Which of the following is generally considered a motive for exiting businesses?

1. Changing corporate strategy or focus
2. Underperforming businesses
3. Regulatory concerns
4. Lack of fit
5. All of the above

1. To decide if a business is worth more to the shareholder if sold, the parent firm generally considers all of the following factors except for

1. The after-tax cash flows of the business to be sold
2. The after-tax sale value of the business to be sold
3. The parents cost of capital
4. A and B
5. A, B, and C

1. Which of the following is not a characteristic of a spin-off?

1. The parent creates a new legal subsidiary for the business to be spun-off
2. The shares of the new subsidiary are sold to the public
3. The ownership of shares in the new legal subsidiary is the same as the stockholders proportional ownership of shares in the parent firm
4. The new business once spun-off has its own management and board
5. Spin-offs are generally not taxable to the parents shareholders if properly structured