A company is considering declaring a dividend verus a stock repurchase. Both transactions will use available...
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A company is considering declaring a dividend verus a stock repurchase. Both transactions will use available cash on the company's balance sheet. If a dividend is declared, the stock price drops, the earnings per share (EPS) remains unchanged, and the price-to-earnings (P/E) ratio drops. What happens to price, EPS, and P/E in a stock repurchase? O Price drops / EPS goes up / P/E drops to the same level as a dividend payment Price does not change / EPS remains constant / P/E drops to the same level as a dividend payment O Price does not change / EPS goes up / P/E drops to the same level as a dividend payment Price moves up / EPS goes up / P/E remains at pre-repurchase level A company is considering declaring a dividend verus a stock repurchase. Both transactions will use available cash on the company's balance sheet. If a dividend is declared, the stock price drops, the earnings per share (EPS) remains unchanged, and the price-to-earnings (P/E) ratio drops. What happens to price, EPS, and P/E in a stock repurchase? O Price drops / EPS goes up / P/E drops to the same level as a dividend payment Price does not change / EPS remains constant / P/E drops to the same level as a dividend payment O Price does not change / EPS goes up / P/E drops to the same level as a dividend payment Price moves up / EPS goes up / P/E remains at pre-repurchase level
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Step 12 YOUR REQUIRED ANSWER IS OPTION D Price moves up EPS goes upPE remains at prerepur... View the full answer
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
Posted Date:
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