Share repurchases are a credible signal that the shares are ________,because if they are ________,a share repurchase is costly for current shareholders.
A) under-priced; over-priced
B) over-priced; under-priced
C) under-priced; under-priced
D) over-priced; over-priced

Question

Quizplus · Accepted Answer

Share repurchases are often interpreted as a signal that the company's management believes its shares are undervalued. If the shares were overpriced, buying them back would be a poor use of the company's funds, to the detriment of current shareholders.

Share Repurchases Are a Credible Signal That the Shares Are