Which statement is correct respecting a company's repurchase of its own shares?
A)It can provide a tax advantage to the shareholder.
B)It provides a negative signal to the market.
C)It causes earnings per share to decrease.
D)Infers that corporate executives believe their company's shares to be overvalued.

Question

Quizplus · Accepted Answer

Repurchasing its own shares can provide a tax advantage to shareholders because it often results in capital gains, which can be taxed at a lower rate than dividends. This method of returning capital to shareholders can be more tax-efficient compared to receiving dividends, which are taxed as ordinary income in many jurisdictions.

Which Statement Is Correct Respecting a Company's Repurchase of Its