Which of these are reasons why some firms choose repurchases over dividends? I.

Question

Which of these are reasons why some firms choose repurchases over dividends? I. To offset the dilution of ownership caused by the exercising of stock options. II. Repurchases offer more flexibility than dividends. III. Management believes the stock is currently overpriced. IV. Executive ownership of stock options.

a. I and II only

b. II and IV only

c. I, II, and IV only

d. II, III, and IV only

e. I, II, III, and IV

Which of these are reasons why some firms choose repurchases over dividends? I. To offset the dilution of ownership caused by the exercising of stock options. II. Repurchases offer more flexibility than dividends. III. Management believes the stock is currently overpriced. IV. Executive ownership of stock options.

a. I and II only

b. II and IV only

c. I, II, and IV only

d. II, III, and IV only

e. I, II, III, and IV

Explanation / Answer

Reasons of some firms choose repurchases over dividends is mention below:

1. To offset the dilution of ownership caused by the exercising of stock options

2. Repurchases offer more flexibility than dividends.

3. Executive ownership of stock options.

Statement first, second and fort are correct.

Hence, option (C) is correct answer.

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