A form of divestiture in which an operating unit becomes an independent company by issuing shares in it on a pro rata basis to the parent company's shareholders is called
A) leverage buyout.
B) employee stock option.
C) spin-off.
D) merger.

Question

Quizplus · Accepted Answer

A spin-off is a form of divestiture in which an operating unit becomes an independent company by issuing shares in it on a pro rata basis to the parent company's shareholders. A leverage buyout involves the acquisition of a company using a significant amount of borrowed money. An employee stock option is a compensation tool that gives employees the right to purchase shares of the company's stock at a predetermined price. A merger is the combination of two or more companies into a single entity.

A Form of Divestiture in Which an Operating Unit Becomes