PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 14, Problem 7PS
Summary Introduction

To discuss: Whether Person X expects the voting stock to sell at a higher price.

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Why might a company repurchase its own stock? A) It believes that the market undervalues its shares B) To offset dilutive effects of employee stock options granted C) To recognize an economic gain when the treasury shares are later sold for a profit D) To improve earnings per share by reducing the denominator E) All of the above is it just A and B or is it all of the above
Which of the following statements concerning common stock and the investment banking process is NOT CORRECT?   a. The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue.     b. The announcement of a large issue of new stock could cause the stock price to fall. This loss is called "market pressure," and it is treated as a flotation cost because it is a cost to stockholders that is associated with the new issue.     c. If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market.     d. Listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity and reputation probably outweigh the additional costs to the firm.     e. Stockholders have the right to elect the firm's directors, who in turn select the officers who manage the business. If stockholders are dissatisfied with…
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