When a Firm Declares a Stock Repurchase

question 117

Multiple Choice

When a firm declares a stock repurchase:

• A)the number of outstanding shares falls along with the price
• B)the number of outstanding shares falls and the price remains unchanged
• C)an investor will receive cash in exchange for a smaller %age of ownership
• D)demand drives the stock price up

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Definitions:

Expansionary Gap

A situation where the actual level of output in an economy exceeds its potential output, often leading to inflation.

Active Approach

An active approach in policy-making or investment strategy entails ongoing, deliberate interventions or decisions to achieve specific economic or financial goals.

Potential Output

The maximum level of real GDP that can be produced when all resources are fully employed in an economy, indicating its productive capacity.

Real GDP

The total value of all goods and services produced within a country, adjusted for inflation, providing a more accurate measure of economic performance.