All Other Things Being Equal,when Companies Repurchases Its Common Stock

question 157

Multiple Choice

All other things being equal,when companies repurchases its common stock:

• A) EPS decreases and ROE increases.
• B) EPS increases and ROE stays the same.
• C) EPS increases and ROE decreases.
• D) EPS and ROE both increase.

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Definitions:

Profit-Maximizing Level

The point at which a business achieves its highest level of profit with its current resources and market conditions.

Economic Profit

The gap highlighted by the difference in total income and total outgoings, including every cost, for a company.

Monopolistically Competitive

A monopolistically competitive market structure is characterized by many firms offering differentiated products or services, allowing for some degree of market power and pricing over their unique products.

Demand Schedule

A table or graph showing the quantity of a good or service that consumers are willing and able to purchase at various price points, illustrating the relationship between price and demand.