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Basic Question 11 of 12

Which of the following would not be considered a disadvantage of a stock repurchase?

A. They may not have the same positive effect on stock prices that a cash dividend would have.
B. They may invite lawsuits from stockholders who had insufficient information about future prospects before selling.
C. The firm may pay too high a price for the repurchased stock.
D. They signal managements perception that the company's stock is currently undervalued.

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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

describe regular cash dividends, extra dividends, stock dividends, stock splits, reverse stock splits, and share repurchases

describe dividend payment chronology

CFA® 2025 Level I Curriculum, Volume 3, Module 8.