Which Two of the Following Are Limits on the Use

question 41

Multiple Choice

Which two of the following are limits on the use of share repurchases?

• A) The firm must gain permission of shareholders.
• B) The size of the repurchase must not exceed 10 per cent of the original share issue.
• C) Initial sales must not be made to existing shareholders.
• D) There must be no creation of an artificial market in the company's shares.

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Definitions:

Markdowns

Reductions in the retail prices of goods, typically to stimulate sales or clear inventory.

Markup

The sum included in the goods' purchase price to account for operational costs and earnings.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit divided by the cost of the investment.

Selling Price

The price at which a product or service is sold to the consumer.