If You Ignore Taxes and Transaction Costs,a Share Repurchase Will

question 42

Multiple Choice

If you ignore taxes and transaction costs,a share repurchase will:
I.reduce the total assets of a firm.
II.increase the earnings per share.
III.reduce the PE ratio more than an equivalent stock dividend.
IV.reduce the total equity of a firm.

• A)I and III only.
• B)II and IV only.
• C)I,II,and IV only.
• D)I,III,and IV only.
• E)I,II,III,and IV.

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Definitions:

Adaptation

A series of beneficial adjustments to a particular environment.

Capacity

The ability or potential a system, person, or organization has to perform, produce, contain, or withstand something.

Prestige Economies

Economic systems where the accumulation and display of wealth is not for personal consumption but to gain status and power within a community.

Social Status

The position or rank of a person or group within the society, often determined by factors like wealth, occupation, education, family background, and power.