Why Does a Stock Repurchase Improve the After-Tax Position of Stockholders

question 55

Multiple Choice

Why does a stock repurchase improve the after-tax position of stockholders over cash dividends?

• A)The theoretical increase in value is taxed at the lower capital gains rate
• B)Reduced shares outstanding increase earnings per share
• C)Cash dividends are taxed as ordinary income
• D)All of the above

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Definitions:

Anxious, Dependent Patient

A patient exhibiting high levels of anxiety and a strong dependency on healthcare providers or caregivers for emotional support.

Cognitive Therapy

A type of therapy that aims to change negative patterns of thinking, helping individuals to view challenging situations more clearly and respond to them more effectively.

Faulty Thinking

Cognitive distortions or irrational patterns of thinking that negatively influence one’s perceptions and decision-making.

Community Setting

A social environment outside of institutional or hospital care where individuals live, work, and interact.