Which of the Following Statements Is Correct

question 74

Multiple Choice

Which of the following statements is correct?

• A)Generally speaking, investors interpret a firm's decision to repurchase their own stock as a positive signal.
• B)A stock repurchase may be viewed as a sign that the firm doesn't have enough attractive capital budgeting projects.
• C)The IRS can impose penalties on a firm if tax authorities can show that the repurchase was performed primarily to avoid dividend taxation.
• D)All of these are correct.

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Definitions:

Expansionary Gap

A situation in macroeconomics when the output of an economy exceeds the potential output level, typically leading to inflationary pressures.

Recessionary Gap

A situation where the real GDP is lower than the potential GDP at full employment, indicating underutilized resources in an economy.

Short-Run Aggregate Supply Curve

A graphical representation that shows the relationship between the total production of goods and services at different price levels in the short term.

Cost of Production

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overhead costs.