From a Tax-Paying Investor's Point of View, a Share Repurchase

question 14

Multiple Choice

From a tax-paying investor's point of view, a share repurchase:

• A)is equivalent to a cash dividend.
• B)is more desirable than a cash dividend.
• C)has the same tax effects as a cash dividend.
• D)is more highly taxed than a cash dividend.
• E)creates a tax liability even if the investor does not sell any of the shares he owns.

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Definitions:

Trends

Patterns or directions identified over periods of time in data sets or within a series of data points.

Multiple Regression

A statistical technique that models the relationship between a dependent variable and multiple independent variables to understand the impact of each on the dependent variable.

Predict the Value

The process of using information from existing data or a statistical model to estimate or forecast the value of an unknown variable.

ANOVA

Analysis of Variance, a statistical method used to compare the means of three or more samples to see if at least one is significantly different from the others.