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.

Correct Answer: D

One of the advantages of a stock repurchase is that it may signal management's perception that the firm's stock is undervalued.