Use the Information for the Question(s)below

question 24

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.
-Assume that Rockwood is able to repurchase shares prior to the market becoming aware of the new information regarding Rockwood's true value.After the repurchase,and following the release of the new information regarding the true value of Rockwood,the firm's share price is closest to:

• A)$30.00.
• B)$31.50.
• C)$28.75.
• D)$30.60.

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Definitions:

Weak Arguments

Arguments that lack solid reasoning, evidence, or both, often failing to convincingly support the stated claim.

Tolerance for Ambiguity

The ability to remain comfortable and react constructively in situations that are unclear, complex, or not immediately understandable.

Name Brand

A brand that is widely recognized by the public and usually associated with a certain level of quality, reliability, and status.

Self-monitoring

The act of observing and regulating one’s own behavior in social situations to fit into the surrounding environment or achieve a personal goal.