From a Tax-Paying Investor's Point of View,a Stock Repurchase

question 1

Multiple Choice

From a tax-paying investor's point of view,a stock repurchase:

• A)is equivalent to a cash dividend.
• B)is more desirable than a cash dividend.
• C)has the same tax effects as a cash dividend.
• D)is more highly taxed than a cash dividend.
• E)creates a tax liability even if the investor does not sell any of the shares he owns.

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Definitions:

ATP Production

The process of generating adenosine triphosphate, a molecule that stores and transfers energy within cells.

Lysosomes

Organelles in cells that contain enzymes to break down waste materials and cellular debris.

Peroxisomes

Organelles found in virtually all eukaryotic cells that contain enzymes involved in the detoxification of harmful substances and in metabolic pathways.

Vesicles

Small structures within cells that contain fluid or cytoplasm and are used for storing or transporting substances.