In which of the following scenarios might a dividend or stock repurchase increase firm value?
A) The firm makes a big dividend payment to its shareholders when management realizes that it is close to bankruptcy.
B) The firm issues debt in order to make the dividend payments or repurchase the stock.
C) The firm repurchases its shares in lieu of undertaking some projects with small, positive NPVs.
D) Dividend payments and stock repurchases neither increase nor decrease firm value.
Correct Answer:
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