Apple Computers Decided to Raise a Large Amount of Money

question 74

Multiple Choice

Apple Computers decided to raise a large amount of money by selling bonds (previously the company had little or no debt) and use the proceeds to repurchase billions of dollars worth of the company's stock.The decision was made after Apple stock lost more than 40% of its value in a six month period when most stock prices were rising.

• A)Apple wanted to lower its cost of capital by substituting debt for equity.
• B)Apple wanted to appease disappointed investors by offering them cash for their stock.
• C)Apple wanted to increase earning per share by reducing the number of shares outstanding.
• D)All of the above are reasonable explanations for Apple's decision.

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Definitions:

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