Suppose a Firm Does Not Pay a Dividend but Repurchases

question 55

Multiple Choice

Suppose a firm does not pay a dividend but repurchases stock using $20 million of cash,the market value of the firm decreases by

• A)$20 million.
• B)-$20 million.
• C)0.
• D)cannot say for sure

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Definitions:

Elastic

In economic terms, the sensitivity of demand for a product relative to changes in price; high elasticity indicates that demand changes significantly with price.

Economic Thinking

The application of economic principles and concepts in analyzing and understanding decision-making, policy implications, and the allocation of resources.

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Aircraft equipped with more than one engine, enhancing safety, power, and performance capabilities, especially in aviation.

Excess Burden

The cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium, often due to taxation or other government intervention.