Which of the following circumstances is likely to motivate a firm to repurchase some of its share?
A)Management believes that the share's market price is below its intrinsic value.
B)The firm has excess cash.
C)Institutional investors prefer share repurchases to cash dividends.
D)All of the above.

Question

Quizplus · Accepted Answer

A) If the management believes that the share's market price is below its intrinsic value, then they may decide to repurchase some of the shares to boost the value of the remaining shares.
B) If the firm has excess cash, it may decide to repurchase some of the shares to return value to shareholders.
C) If institutional investors prefer share repurchases to cash dividends, the firm may choose to repurchase some of the shares to maintain investor confidence and attract more institutional investment. Therefore, all of the above are likely circumstances that would motivate a firm to repurchase some of its shares.

Which of the Following Circumstances Is Likely to Motivate a Firm