Which of the following is correct?
a)If a company put in place a 2-for-1 stock split, its stock price should roughly double.
b)Share repurchases are taxed less favorably than dividends; this explains why companies typically pay dividends and avoid share repurchases.
c) Very often, a company's stock price will rise when it announces that it plans to commence a share repurchase program. Rarely will such an announcement lead to a stock price decline.
d) Stock repurchases increase the number of outstanding shares.
The solution is very easy to understand and concise. It is an excellent response for students who want to understand the concepts and then use the same concepts to solve similar problems in the future. Overall, an excellent response. The solution provides the necessary steps which are easy to follow.