Question

Repurchases give stockholders a choice to (buy or sell) their stock and realize their capital gains or keep their stock and receive future dividends.

Repurchase transactions allow a firm to buy back stock that may be needed to fulfill obigations when employees exercise their stock options. This (saves or increases) the costs associated with issuing new shares.

Repurchases allow a firm to buy back as much stock as it wants, at whatever price it wants, without affecting shareholders. This statement is (true or false)

Dividends provide signals about a firm's future prospects, whereas some investors might misinterpret why a firm is repurchasing stock. This statement is (true or false)

Answer 1

1) Repurchases give stockholders a choice to sell their stock and realize their capital gains or keep their stock and receive future dividends. Here company will purchase the stock and hence no of shares in the market will decrease leaing to increase in EPS

2) Repurchase transactions allow a firm to buy back stock that may be needed to fulfill obigations when employees exercise their stock options. This saves the costs associated with issuing new shares.

3)Repurchases allow a firm to buy back as much stock as it wants, at whatever price it wants, without affecting shareholders. This statement is False

Buyback is limited to 10% of PUC and price has to be fixed according to market price

4) Dividends provide signals about a firm's future prospects, whereas some investors might misinterpret why a firm is repurchasing stock. This statement is True