Suppose a Firm Does Not Pay a Dividend but Repurchases

question 41

Multiple Choice

Suppose a firm does not pay a dividend but repurchases stock using $20 million of cash.The market value of the firm decreases by:

• A)$20 million.
• B)-$20 million.
• C)0.
• D)$40 million.
• E)-$40 million.

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Definitions:

Individualism

A social theory favoring freedom of action for individuals over collective or state control.

Teamwork

Involves individuals working together in a cooperative manner to achieve shared objectives, leveraging diverse skills and perspectives.

Team Spirit

The sense of camaraderie and unity among members of a group, motivating collaboration towards common goals.

Adversary

An opponent or competitor in a conflict or contest.