When a Company Buys Back Some of Its Shares and the Amount

question 16

Multiple Choice

When a company buys back some of its shares and the amount used to pay dividends remains the same after the buyback,the return on each ordinary share will:

• A) increase
• B) decrease
• C) remain the same
• D) it depends

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Definitions:

Interest Payments

The payments made by borrowers to lenders as a fee for using the borrowed money, typically expressed as an annual rate.

Tax Deductible

Refers to eligible expenses that can be subtracted from taxable income, thereby reducing the total amount of tax owed to the government.

Discount

A reduction in the price of a good or service, typically to encourage purchase.