Ignoring possible tax effects and signaling costs, the total value of a firm\'s

Question

Ignoring possible tax effects and signaling costs, the total value of a firm's equity remains the same irrespective of how the firm distributes its residual earnings-dividends or stock repurchases. Each distribution method has certain advantages and disadvantages. Based on your understanding of dividends and stock repurchases, select the best terms to go with the statements. Repurchases give stockholders a choice to their stock and realize their capital gains or keep their stock and receive future dividends. Sell Buy Repurchases are more dependable than dividends because the investor wealth does not decrease after a repurchase, whereas the stock price decreases when dividends are distributed. This statement is False True Based on the company's earnings in a particular year, repurchases can be made on an ad hoc basis without sending any negative signals to investors. This statement is True False Repurchases allow investors who need cash to convert their investment in the company into . Cash Additional stock

Explanation / Answer

1. sell

2. False.

3. True.

4.cash

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