Which of the following is NOT accurate regarding share repurchases?
A) In a perfect world, there would be essentially no difference between a share repurchase and a cash dividend.
B) Share repurchases cannot be undertaken with the sole purpose of avoiding taxes.
C) Repurchasing shares is a useful method of stabilizing cash dividends.
D) Share repurchases result in an increase in earnings per share.
E) Investors will not prefer share repurchases to extra cash dividends if the capital gains tax rate is lower than the tax rate on dividends.
Correct Answer:
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