Which One of the Following Statements Related to Stock Repurchases

question 11

Multiple Choice

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

• A)An open market stock repurchase increases the total wealth of a shareholder if you ignore taxes, costs, and market imperfections.
• B)Targeted repurchases must be offered to all shareholders but can be done in steps such that only a portion of the shareholders have the option to sell at any one point in time.
• C)When a firm wishes to repurchase shares in the open market, it will do so in a special trading session that is set up by the SEC.
• D)A firm may spend more cash over the course of a year on stock repurchases than it does on cash dividends.
• E)Tender offer prices must be set equal to the opening market price on the day the tender offer is announced.

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Definitions:

Cash Distribution

The payment of earnings from a corporation or a fund to its shareholders or investors.

Rental Income

The money earned from renting out a property or real estate.

Separately Stated

Separately stated items refer to certain income, deductions, and credits listed separately on a tax return or statement, affecting the taxpayer's obligations.

Recognized Gain

The portion of profit that must be reported for taxation purposes when an asset is sold or disposed of for more than its purchase price.