Question

If a firm has excess cash and management believes the firm's shares are currently undervalued by...

If a firm has excess cash and management believes the firm's shares are currently

undervalued by market participants, the firm is a likely candidate for a

_________________.

a. liquidating dividend

b. stock dividend

c. regular cash dividend

d. stock repurchases

e. stock split
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Answer #1

If a firm has excess cash and management belives the firm's share are currently undervalued by market participants, the firm is a likely candidates for a d. stock repurchases.

Note: Since, the firm has excess cash (means excess fund than required) and also the current value of shares are undervalued by market participants, the firm has a good opportunity to repay the temporary owners  and restrict the ownership and control in few permanent hands.

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