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:

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