An Investor Owns 5,000 Shares, Which Is 1% of a Corporation's

question 25

Multiple Choice

An investor owns 5,000 shares, which is 1% of a corporation's outstanding stock before a stock repurchase.The investor did not sell any of his stock during the 25,000 share repurchase.Which of the following statements is correct?

• A)the investor still owns 1% of the corporation.
• B)the stock's price is likely to drop by 5%.
• C)the investor owns more than 1% of the corporation.
• D)the investor now has 5,250 shares.

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Definitions:

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for significant differentiation and some degree of market power.

Total Revenue

The total amount of money received by a firm from sales of its products or services.

Total Cost

Total cost is the complete cost of production, including both fixed and variable costs incurred in the production of goods or services.

Marginal Cost

The cost of producing one more unit of a good or service, crucial for economic decision-making processes.