Which One of the Following Is Not a Reason Why

question 74

Multiple Choice

Which one of the following is not a reason why firms choose repurchases rather than dividends?

• A)Provide flexibility
• B)Increase the value of existing stock options
• C)Provide shareholders with a tax advantage
• D)Offset dilution
• E)Conserve cash

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Definitions:

Premium

The excess of the issue price of bonds over their face amount; the excess of the issue price of stock over its par value.

Bonds Payable

A liability account that records the amount owed by an entity to holders of its bonds, to be repaid at a specified future date.

Straight-Line Method

An accounting method for calculating the depreciation of an asset, distributing its cost evenly across its useful life.

Interest-Bearing Note

A debt instrument that pays periodic interest payments to the holder until maturity, at which point the principal is repaid.