Which One of the Following Statements Related to Stock Repurchases

question 11

Multiple Choice

Which one of the following statements related to stock repurchases is correct?

• A)An open market stock repurchase increases the total wealth of a shareholder if you ignore taxes, costs, and market imperfections.
• B)Targeted repurchases must be offered to all shareholders but can be done in steps such that only a portion of the shareholders have the option to sell at any one point in time.
• C)When a firm wishes to repurchase shares in the open market, it will do so in a special trading session that is set up by the SEC.
• D)A firm may spend more cash over the course of a year on stock repurchases than it does on cash dividends.
• E)Tender offer prices must be set equal to the opening market price on the day the tender offer is announced.

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Definitions:

Net Present Value

A financial metric that calculates the value of a project or investment in today's dollars, discounting future cash flows to their present value.

Cash Outlay

The actual amount of money spent or invested in a specific period or for a specific purpose.

Cash Savings

Funds that are kept on hand or in a savings account for future needs, emergencies, or investment opportunities.

Investment Opportunities

Potential placements of capital in projects or assets that are expected to yield returns or financial growth over time.