When a Firm Offers to Buy Its Shares at a Prespecified

question 63

Multiple Choice

When a firm offers to buy its shares at a prespecified price during a short time period it is also known as a(n) :

• A)open market purchase.
• B)tender offer.
• C)targeted repurchase.
• D)greenmail.
• E)Dutch auction.

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Definitions:

Payback Period

The length of time it takes to recover the initial cost of an investment.

Accounting Rate of Return

A financial metric used to assess the profitability and potential return of an investment or project, based on the average annual profit compared to the initial investment cost.

Time Value

The concept that money available today is worth more than the same amount in the future due to its earning potential.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.