All of the Following Are Advantages of Share Repurchase as a Dividend

question 65

Multiple Choice

All of the following are advantages of share repurchase as a dividend decision EXCEPT:

• A)effectively converts dividend income into capital gains income
• B)provide firm with greater financial flexibility in timing the payment of returns to shareholders.
• C)all current shareholders are able to sell their shares at a higher price
• D)they represent a signal to investors that the company expects higher earnings in the future

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Definitions:

Level of Significance

The probability of rejecting the null hypothesis when it is actually true, used as a threshold in hypothesis testing.

Test Statistic

A calculated value from a data sample used to test a hypothesis against some criteria.

P-Value

The probability of observing a statistical summary at least as extreme as the one observed if the null hypothesis is true.

Sample Mean

The average of a set of numerical values taken from a larger population, used as an estimate of the population mean.