Which of the Following Is NOT a Possible Result of a Stock

question 3

Multiple Choice

Which of the following is NOT a possible result of a stock repurchase?

• A) Removing a large number of shares from circulation can change the ability of certain shareholders to control the firm.
• B) If the number of remaining shares is relatively small, the remaining shares will be less liquid.
• C) The debt-to-equity ratio will be increased.
• D) By repurchasing stock when it is undervalued, managers can effectively transfer value from stockholders who choose to sell their shares to stockholders choose to remain invested in the company.

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Definitions:

Operating Cost

Expenditures directly related to the day-to-day operations of a business, including costs for materials, labor, and overhead.

Useful Life

The duration for which an asset is expected to be operationally productive, impacting its depreciation schedule and replacement planning.

Value-based Pricing

A pricing strategy where prices are set primarily on the perceived value to the customer rather than on the cost of the product or historical prices.

Industrial Grinder

A heavy-duty machine designed for industrial applications, such as grinding metals or plastics.