Which of the Following Circumstances Is Likely to Motivate a Firm

question 86

Multiple Choice

Which of the following circumstances is likely to motivate a firm to repurchase some of its stock?

• A) Management believes that the stock's market price is below its intrinsic value.
• B) The firm has excess cash.
• C) Institutional investors prefer stock repurchases to cash dividends.
• D) All of the above.

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Definitions:

Withdraw

The action of removing funds from an account or investment.

Compound Rate

The rate at which interest is calculated on the initial principal and also on the accumulated interest of previous periods.

Annually

Occurring once every year or relating to a period of one complete year.

Interest

The cost of borrowing money, represented as a percentage of the total amount loaned.