A Share Repurchase Is Said to Be Equivalent to the Payment

question 102

Multiple Choice

A share repurchase is said to be equivalent to the payment of a cash dividend because each strategy:

• A)causes share price to decline.
• B)causes share price to increase.
• C)creates the same tax liability for the investor.
• D)leaves the firm with the same amount of assets.

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Definitions:

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity.

Balance Sheet

An economic report indicating a company's possessions, financial responsibilities, and the value belonging to shareholders at a certain instance.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net profit or loss.

Accounting Equation

A basic principle of accounting that represents the relationship between an entity's assets, liabilities, and owners' equity (Assets = Liabilities + Owners' Equity).