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:

Class System

A social stratification where people are grouped into a set of hierarchical social categories, often based on wealth, education, and occupation.

Labor Shortage

Describes a situation in which there are not enough qualified workers available to fill the job positions in a particular industry or overall economy.

Southern Planters

Wealthy individuals in the antebellum South who owned large farms or plantations and typically relied on enslaved labor for their agricultural operations.

Confederate War Effort

The military and civilian actions taken by the Confederacy during the American Civil War to achieve independence from the United States.