A share repurchase is said to be equivalent to the payment of a cash dividend because each strategy:
A) causes share price to decline.
B) causes share price to remain constant.
C) creates the same tax liability for the investor.
D) reduces the assets of the firm by the same amount.

Question

Quizplus · Accepted Answer

Both share repurchase and cash dividend reduce the firm's assets by distributing cash to shareholders, thus having a similar impact on the firm's balance sheet.

A Share Repurchase Is Said to Be Equivalent to the Payment