Which of the Following Considerations Should NOT Be Related to Management's

question 44

Multiple Choice

Which of the following considerations should NOT be related to management's concerns when setting a stock repurchase policy?

• A) Over the long term, how much does a company's level of earnings exceed its investment requirements? How certain is this level?
• B) Is the stock currently undervalued? Can the management add value to the company by initiating a stock repurchase?
• C) Does a firm have enough financial reserves to meet the short-term obligations in periods when earnings are down or investment requirements are up?
• D) Can a firm quickly raise equity capital if necessary?

Understand the concept of the reward for bearing risk and how to calculate it.

Learn how to calculate dividend yield on a stock.

Grasp the concept of real rate of return and how to calculate it.

Understand the distribution of stock returns and how to use it in calculations.

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