A large U.S. company recently set up a new corporation based on the assets from one of its divisions. The stock of the new corporation was titled to the stockholders of the original firm. This change is an example of a

Answer (D) is correct. The transaction described is a spin-off, which is a kind of divestiture. The types of divestiture are sale of a subunit to another company, sale of a subunit to the subunit’s management, piecemeal liquidation of the subunit’s assets, and a spin-off. This last form of divestiture is characterized by establishing a new and separate entity and transferring its newly issued stock to the shareholders of the original company.