With perfect capital markets, an open market repurchase increases the share price as the number of outstanding shares is decreased.

Name: With perfect capital markets, an open market repurchase increases the share price as the number of outstanding shares is decreased.
Brand: Quizplus
Rating: 4.9 (63 reviews)

Question

Quizplus · Accepted Answer

In perfect capital markets, an open market repurchase does not affect the share price because the market value of the firm remains unchanged; the reduction in the number of shares is offset by the decrease in cash holdings.

With Perfect Capital Markets, an Open Market Repurchase Increases the Share