From the Firm's Point of View, a Major Advantage of Stock

question 39

Multiple Choice

From the firm's point of view, a major advantage of stock repurchases over cash dividends is

• A) a commitment to maintain or increase repurchases every year.
• B) a stronger signal about the firm's financial strength.
• C) that they restrain agency costs.
• D) that the repurchases imply no commitment to pay the same amount or more every year.

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Definitions:

M2

A measure of the money supply that includes cash, checking deposits, and easily convertible near money such as savings deposits, money market securities.

Savings Account

A deposit account held at a financial institution that provides principal security and a modest interest rate.

Traveler's Checks

A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of its being counter-signed.

M2

A gauge of the total money available that encompasses physical currency, deposits in checking accounts, and near money assets like savings accounts and money market investments, which can be quickly converted to cash.