Assume That You Own 2500 Shares of Omicron Stock and That

question 59

Multiple Choice

Assume that you own 2500 shares of Omicron stock and that Omicron uses the entire $50 million to pay a special dividend.Suppose you are unhappy with Omicron's decision and would prefer that Omicron used the excess cash to repurchase shares.The number of shares that you would have to buy in order to undo the special cash dividend that Omicron paid is closest to:

• A) 125
• B) 310
• C) 250
• D) 205

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Definitions:

Cash Dividend

A share of a company's profits paid out to its shareholders in cash.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout, increasing the total number of shares owned by shareholders.

Shares Outstanding

The total number of shares of stock that have been issued and are currently owned by shareholders.

Book Value

The value of an asset as recorded on the balance sheet, calculated as the cost of the asset minus any depreciation.