Which one of the following statements related to stock repurchases is correct?
A) An open market stock repurchase increases the total wealth of a shareholder if you ignore taxes, costs, and market imperfections.
B) Targeted repurchases must be offered to all shareholders but can be done in steps such that only a portion of the shareholders have the option to sell at any one point in time.
C) When a company wishes to repurchase shares in the open market, it will do so in a special trading session that is set up by the SEC.
D) A company may spend more cash over the course of a year on stock repurchases than it does on cash dividends.
E) Tender offer prices must be set equal to the opening market price on the day the tender offer is announced.

Question

Quizplus · Accepted Answer

It is possible for a company to spend more cash on stock repurchases than cash dividends, depending on their priorities and financial situation. This statement is true. The other statements are incorrect: 
A) Ignoring taxes, costs, and market imperfections is unrealistic, and it also doesn't consider the opportunity cost of the company using its cash for other investments. 
B) Targeted repurchases can be selective, but they must still be offered to all shareholders. 
C) There is no special trading session set up by the SEC for open market stock repurchases. 
E) Tender offer prices can be set at any price, not just the market price on the day of the announcement.

Which One of the Following Statements Related to Stock Repurchases