A Major Disadvantage of Stock Repurchases Is That the Company

question 6

Multiple Choice

A major disadvantage of stock repurchases is that the company:

• A)spends most of its excess cash to repurchase the stock.
• B)cannot change its capital structure through such an action.
• C)becomes more vulnerable to takeovers after the stock repurchase.
• D)might pay too much for stock that is repurchased.
• E)makes it difficult for employees to exercise their stock options.

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Definitions:

Critical Thinking

The process of objectively evaluating claims, propositions, and conclusions to determine whether they follow logically from the evidence presented.

Objectively Evaluating

The process of examining something in an unbiased, impartial manner without allowing personal feelings to influence the assessment.

Naturalistic Observation

A research method involving the observation of subjects in their natural environment without any manipulation or interference.

Sociocultural Perspective

An approach in psychology that examines how societal and cultural factors influence behaviors and mental processes.