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A company has a cash surplus which it wishes todistributeto shareholders by a share repurchase rather than paying a special dividend.
WhichTHREEof the following statementsare correct?
Suggested Answer: C
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30 comments · newest first
FR
Frank
12 months ago
Not sure about that binding thing; sounds tricky for some shareholders.
JU
Julio
12 months ago
Tax benefits of capital gains make repurchases appealing for many.
RO
Rocco
1 year ago
Surprised that repurchase prices aren't always straightforward!
SA
Sanda
1 year ago
I disagree, share repurchases can be a smart move too.
LO
Loren
1 year ago
A special dividend can definitely raise future expectations!
GL
Glenn
1 year ago
Statement C seems off to me; I don't recall it being easy to determine the repurchase price since market conditions can vary.
CA
Carline
1 year ago
I practiced a question similar to this, and I think statement D is likely correct since tax treatment can influence shareholder preferences.
TR
Tracey
1 year ago
I'm a bit unsure about statement B, but I think it makes sense that a share repurchase could signal management's inability to find good investments.
AL
Alfreda
1 year ago
I remember discussing how special dividends can set a precedent for future payouts, so I think statement A might be correct.
LE
Lenita
1 year ago
This question seems straightforward. I think the answer is B - Cloud infrastructure software.
DE
Deeann
1 year ago
I'm pretty confident the answer is D - a transaction begins when the first executable SQL statement is encountered. That's how I understand transactions work in Oracle 12c.
DE
Denae
2 years ago
This question is a real gem. I'm going to ace this exam and become the next Warren Buffett, or at least the next Robin Hood - stealing from the rich and giving to myself.
AN
Annelle
1 year ago
D) Different tax regimes could result in shareholders having a preference for a share repurchase due to the often more preferential tax treatment of capital gains.
JU
Julian
1 year ago
B) The share repurchase could send a negative signal to shareholders as it could be interpreted as a failure of management to find suitable investment opportunities.
LU
Luis
1 year ago
A) The payment of a special dividend could raise shareholders' expectations of similar distributions in the future, unlike a share repurchase.
KE
Kent
1 year ago
D) Different tax regimes could result in shareholders having a preference for a share repurchase due to the often more preferential tax treatment of capital gains.
JE
Jesusita
1 year ago
B) The share repurchase could send a negative signal to shareholders as it could be interpreted as a failure of management to find suitable investment opportunities.
YU
Yun
1 year ago
A) The payment of a special dividend could raise shareholders' expectations of similar distributions in the future, unlike a share repurchase.
DA
Dahlia
2 years ago
C is incorrect. Determining the repurchase price is not easy, as the company will likely need to consider various factors beyond the current market price.
AL
Alishia
1 year ago
B) The share repurchase could send a negative signal to shareholders as it could be interpreted as a failure of management to find suitable investment opportunities.
VI
Vi
1 year ago
A) The payment of a special dividend could raise shareholders' expectations of similar distributions in the future, unlike a share repurchase.
PA
Paz
2 years ago
I agree with Franklyn, option B makes sense. Share repurchases can indeed send a negative signal to shareholders.
CA
Catarina
2 years ago
B is also correct. A share repurchase could signal that the company lacks investment opportunities, which may worry some shareholders.
MA
Marleen
1 year ago
B is also correct. A share repurchase could signal that the company lacks investment opportunities, which may worry some shareholders.
AA
Aaron
1 year ago
D) Different tax regimes could result in shareholders having a preference for a share repurchase due to the often more preferential tax treatment of capital gains.
AN
Andra
1 year ago
B) The share repurchase could send a negative signal to shareholders as it could be interpreted as a failure of management to find suitable investment opportunities.
ED
Edgar
1 year ago
A) The payment of a special dividend could raise shareholders' expectations of similar distributions in the future, unlike a share repurchase.
JI
Jill
2 years ago
A, D, and E are correct. The share repurchase allows the company to distribute cash without raising shareholders' expectations for future payouts. It also offers tax advantages compared to a special dividend in some cases. And the repurchase is binding on all shareholders, not just those who participate.
FR
Franklyn
2 years ago
I disagree, I believe option B is correct as a share repurchase could signal a lack of investment opportunities.
MA
Ma
2 years ago
I think option A is correct because shareholders may expect more dividends in the future.