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:

Frustration-Aggression Principle

A psychological theory suggesting that aggression is caused by blocking, or frustrating, a person's efforts to achieve a goal.

Mere Exposure Effect

The phenomenon by which people tend to develop a preference for things merely because they are familiar with them.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, also known as the "knew-it-all-along" effect.

Other-Race Effect

This phenomenon describes the tendency to more easily recognize faces of the race that one is most familiar with, which is often their own race.