Currently, the firm has available capital (cash and net income) of approximately $7,000,000. There is a large block of stock available at $35 a share.

The market price of shares is likely to rise above $35.75 once the purchase of the large block at $35 a share is completed. Buying a lot of stock indicates a lot of demand for the stock at that price. This demand will likely continue after the purchase is completed, driving up the market price.

 

Would a dividend be better? Please discuss the pros and cons of dividends and share buybacks. 

Answer rating: 100% (QA)

1 Would a dividend be better No buying a large block of stock at 35 a share would be a better option ... View the full answer