Question 6-10 6. A split-up involves the creation of a new class of stock for ea

Question

Question 6-10

6. A split-up involves the creation of a new class of stock for each of the parent's operating subsidiaries, paying current shareholders a dividend of each new class of stock, and then dissolving the remaining corporate shell True or False 7. The parent firm generally retains control of the business involved in an equity carve-out. True or False 8. In an equity carve-out, the cash raised by the subsidiary in this manner may be transferred to the parent as a dividend or as an inter-company loan. True or False 9. When a parent creates a tracking stock for a subsidiary, it is giving up all control of that subsidiary. True or False 10. Divestitures always result in the parent receiving cash or stock from the buyer. True or False

Explanation / Answer

solution 6: False
In a split up, a company is splitted into two seperate entitities. In this corporate action, shares of the companies are exchanged after breaking the single company into individual independent companies.In this process, The corporate shell is not broken and a dividend of stock is not paid to the existing shareholders.

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