Which of the following statements is correct?
A)If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.
B)An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.
C)Stock repurchases tend to reduce financial leverage.
D)If a company declares a 2-for-1 stock split, its stock price should roughly double.

Question

Quizplus · Accepted Answer

When shareholders sell their stock for more than they paid for it, they will be subject to capital gains taxes regardless of whether the company repurchased the stock or not.

Which of the Following Statements Is Correct