Suppose a Firm Does Not Pay a Dividend but Repurchases

question 41

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)$40 million.
• E)-$40 million.

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Definitions:

Pacinian Corpuscle

A type of nerve ending in the skin that detects pressure and vibration.

Free Nerve Endings

Sensory nerve fibers that extend into the tissues and open on the surface or just below, responsible for sensing pain, temperature, and touch.

Sensory Receptor

Specialized cells or cell parts that detect external or internal stimuli and transmit signals to sensory neurons.

Deep Pressure

A type of tactile input that is firm and usually applied to larger areas of the body, often used therapeutically to promote relaxation and decrease stress.