Which of the following is not true of a divestiture?
A) May create cash infusion for the parent firm
B) Parent ceases to exist
C) Proceeds of sale taxable if returned to shareholders through a dividend or stock buyback
D) A new legal subsidiary may be created
E) B and C

Question

Quizplus · Accepted Answer

A divestiture involves selling off a portion of a company or a subsidiary, but it does not necessarily result in the parent company ceasing to exist. Option A, C, and D are all possible outcomes of a divestiture.

Which of the Following Is Not True of a Divestiture