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CA Final Corporate Spin-Off — practice questions

Explore 55 free Corporate Spin-Off questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

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Corporate Spin-Off questions and exercises with answers

Showing questions 1–30 of 55.

In corporate finance, divestment is best described as the opposite of what?Read the answer and worked solution →A firm sells non-core businesses. Which motive does this serve?Read the answer and worked solution →CSX sold businesses to focus on railroads. What second aim?Read the answer and worked solution →A firm is worth more broken up when asset liquidation values do what?Read the answer and worked solution →Why did Philips divest its NXP chip division?Read the answer and worked solution →In 1984 the US Department of Justice broke up the Bell System into AT&T and how many Baby Bells?Read the answer and worked solution →Why might regulators force a company to divest a business before approving a merger?Read the answer and worked solution →Which body did India set up to handle state stake sales?Read the answer and worked solution →Among top firms, which group earns higher shareholder returns?Read the answer and worked solution →Divisions liquidate for Rs 220, 180 and 160 crore; market value is Rs 500 crore. Break-up excess?Read the answer and worked solution →A firm owes Rs 300 crore, sells a division for Rs 80 crore and repays debt. Debt left?Read the answer and worked solution →Which NGO coordinated the fossil fuel divestment movement that began in the 2010s?Read the answer and worked solution →A corporate spin-off is distinct from which transaction in which a unit is sold for cash or securities?Read the answer and worked solution →In a spin-off, what do parent company shareholders receive?Read the answer and worked solution →Agilent Technologies was spun off from which company in 1999?Read the answer and worked solution →Why may a separated high-growth unit get a higher multiple?Read the answer and worked solution →What does the term conglomerate discount mean?Read the answer and worked solution →Foster's got no good offer for its wine arm. What did it do?Read the answer and worked solution →Which of these is another name for a corporate spin-off?Read the answer and worked solution →What is the second meaning of a spin-out?Read the answer and worked solution →Which kind of support might a parent give a new spin-off to create cash flow?Read the answer and worked solution →A parent gives 1 spin-off share per 5 parent shares. An investor holds 1,000. Spin-off shares received?Read the answer and worked solution →A management buyout (MBO) is an acquisition by whom?Read the answer and worked solution →Why is due diligence in an MBO usually limited?Read the answer and worked solution →In an MBO, why does the seller give only the most basic warranties?Read the answer and worked solution →Which problem arises from managers' inside information in an MBO?Read the answer and worked solution →Why do backers want managers to invest all they can afford?Read the answer and worked solution →Private equity backers of an MBO generally aim to exit after about how long?Read the answer and worked solution →In an MBO backed by private equity, what is the warranty gap?Read the answer and worked solution →Why might a seller agree to vendor financing for tax reasons?Read the answer and worked solution →

Worked practice questions

In corporate finance, divestment is best described as the opposite of what?

  1. An investment
  2. A merger deal
  3. A dividend
  4. A share buyback
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Correct answer: A. An investment

Divestment reduces assets by selling them, which is the reverse of putting money into an asset.

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A firm sells non-core businesses. Which motive does this serve?

  1. Raising its tax rate
  2. Entering new markets
  3. Sharpening core focus
  4. More diversification
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Correct answer: C. Sharpening core focus

Selling non-core units lets management concentrate resources on the business the firm is best at.

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CSX sold businesses to focus on railroads. What second aim?

  1. Repaying existing debt
  2. Raising a bank licence
  3. Cutting rail capacity
  4. Buying a rival railway
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Correct answer: A. Repaying existing debt

CSX used the cash from its divestitures to pay off some of its existing debt as well as to sharpen its core railroad focus.

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More Strategicfinancialmanagement topics

Mergers Acquisitions and Corporate RestructuringBusiness ValuationCapital BudgetingForeign Exchange Exposure and Risk ManagementInterest Rate RiskModern Portfolio TheoryPortfolio ManagementValuation (Finance)