Which one of these statements is correct? Fixed stock repurchases allow managers

Question

Which one of these statements is correct?

Fixed stock repurchases allow managers to repurchase shares only when they feel those shares are undervalued

Since the early 1980s, it has become increasingly more difficult to do a stock repurchase due to SEC regulations.

Stock repurchases send the exact same signals to investors as do cash dividends.

It is relatively easy to determine whether or not a firm has completed a planned stock repurchase.

A fixed stock repurchase plan could be a negative net present value investment for the stock issuer.

justify your answer or no rating

Explanation / Answer

Correct statement is;

A fixed stock repurchase plan could be a negative net present value investment for the stock issuer.

Explanation

The money used to buy back shares could have been used more profitably internally, in this case it may result a negative net present value investment for the stock issuer.

Apart from this under fixed stock repurchase plan, if company does not receive desired amount at a huge cost of buy back then it may result a negative net present value too.

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