Which of the following is NOT correct in comparing a share repurchase to a cash dividend in a world with no taxes, transaction costs, or other market imperfections?
A) The price of the firm's stock will be the same after the share repurchase or the cash dividend.
B) The firm's EPS will be higher after the repurchase than it will be after the dividend.
C) The firm's price/earnings ratio will be the same after the share repurchase or the cash dividend.
D) The firm will have fewer shares of stock outstanding after the repurchase than it will after the dividend.
E) The total wealth of an individual shareholder will not be affected by the share repurchase or the cash dividend.
Correct Answer:
Verified
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