Use the Information for the Question(s)below

question 47

Multiple Choice

Use the information for the question(s) below.
Rockwood Industries has 100 million shares outstanding,a current share price of $25,and no debt.Rockwood's management believes that the shares are underpriced,and that the true value is $30 per share.Rockwood plans to pay $250 million in cash to its shareholders by repurchasing shares.Management expects that very soon new information will come out that will cause investors to revise their opinion of the firm and agree with Rockwood's assessment of the firm's true value.
-If Rockwood is able to repurchase shares prior to the market becoming aware of the new information regarding Rockwood's true value,then the number of shares outstanding following the repurchase is closest to:

• A)92 million.
• B)10 million.
• C)75 million.
• D)90 million.

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Definitions:

Gesellschaft

A term used in sociology to describe a society characterized by weak interpersonal relationships, with social bonds based more on self-interest and less on familial or community ties.

Gemeinschaft

A term used in sociology to describe community bonds and social relations based on personal and family ties, often contrasted with Gesellschaft (society).

Modernization

The process through which societies transform from traditional rural agrarian economies to secular, urban, and industrialized systems.

Sex Ratio

Indicates the proportion of males to females in a population.