A Share Repurchase Is Said to Be Equivalent to the Payment

question 48

Multiple Choice

A share repurchase is said to be equivalent to the payment of a cash dividend because each strategy:

• A) causes share price to decline.
• B) causes share price to remain constant.
• C) creates the same tax liability for the investor.
• D) reduces the assets of the firm by the same amount.

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Definitions:

Excise Tax

A tax levied on specific goods, services, or transactions, often with the aim of reducing their consumption or generating revenue.

Buyers

Individuals or entities that purchase goods or services for personal use, resale, or to add value in a production process.

Sellers

Persons or organizations that provide products or services to be purchased in the marketplace.

Price Ceiling

A maximum price sellers are allowed to charge for a good or service; a form of price control.