Which One of the Following Statements Related to Stock Buybacks

question 65

Multiple Choice

Which one of the following statements related to stock buybacks is correct?

• A)Stock buybacks are a means of obtaining shares for employee stock option grants.
• B)Stock buybacks are becoming rare and may soon disappear totally.
• C)In 2007 and 2008, U.S. companies issued more shares than they repurchased.
• D)Firms are permitted only one large share repurchase program.
• E)Share repurchases are limited to 10 percent of the firm's outstanding shares.

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Definitions:

High Beta Portfolios

Investment portfolios that are composed of stocks or financial instruments with a high beta, indicating higher volatility and potential for higher returns or losses compared to the market.

Low Beta Portfolios

Investment portfolios comprised of assets that have lower volatility and are less sensitive to market movements compared to the broader market.

Security Market Line

A line in the capital asset pricing model (CAPM) that depicts the relationship between the expected return of an investment and its risk.

Return and Risk-Free Rate

The difference between the total return on an investment and the risk-free rate of return, indicating the excess compensation for taking on risk.