Which of the Following Statements About the Relative Advantages of Share

question 36

Multiple Choice

Which of the following statements about the relative advantages of share buy-backs over dividends is NOT true?

• A) Share buy-backs send a stronger signal than dividends to the market about management's belief that the company's prospects are good.
• B) On-market share purchases allow management more flexibility because investors are less likely to react if the management cuts back or ends a share buy-back as compared to cutting back on dividend payments.
• C) Share buy-backs allow shareholders to choose whether or not to participate in the share buy-back. This allows shareholders to have more control over their tax burden.
• D) Historically, tax on dividend payment have been higher than those on share buy-backs.

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