When a firm pays out a dividend, the share price _, and when it conducts a share repurchase at the market price, the share price .

Question

Quizplus · Accepted Answer

When a firm pays out a dividend, the share price typically decreases by the amount of the dividend because the cash is leaving the company. In a share repurchase, the share price is generally unchanged because the repurchase is done at the market price, and it does not directly affect the share price.

When a Firm Pays Out a Dividend, the Share Price