Stock Repurchases May Be Interpreted by Investors as a Signal

question 6

Multiple Choice

Stock repurchases may be interpreted by investors as a signal that:

• A) future repurchases will be forthcoming.
• B) the firm's shares are underpriced.
• C) the firm has an increasing number of positive-NPV opportunities.
• D) stock repurchases will gradually replace the stock dividends.

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Definitions:

U.S. Senators

are elected officials who represent their states in the United States Senate, one of the two chambers of the United States Congress, with two senators per state.

Federal Organization

A system of government where power is divided between a central government and smaller political units, such as states.

Electoral College

A body of electors established by the Constitution that is responsible for selecting the President and Vice President of the United States.

Democratic Popular Pressure

The force or influence applied by the general populace or societal groups to effect change or influence decision-making in a democratic system.