Which of the following statements is NOT CORRECT?
A. Stock repurchases can be used by a firm as part of a plan to change its capital structure.
B. After a 3-for-1 stock split, a company's price per share should fall, but the number of shares outstanding will rise.
C. Investors may interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued, or, alternatively, as a signal that the firm does not have many good investment opportunities.
D. A company can repurchase stock to distribute a large one-time cash inflow, say from the sale of a division, to stockholders without having to increase its regular dividend.
E. Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan.
Answer: E
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Which of the following is a characteristic of a limited liability company (LLC)?
A) It is a separate legal person (or entity) under state law. B) It cannot be found civilly liable for violations of law. C) Its owners are called directors. D) Its owners are personally liable to third parties for debts of the LLC.
The data needed for cost-volume-profit analysis is readily available if the income statement is prepared under absorption costing.
Answer the following statement true (T) or false (F)
Identify the individual who serves as a go-between for the buyer and seller, but is not seen as a permanent representative of the buyer or seller.
Which of the following is true regarding a second round of financing?
A) IPO investors will pay the highest price per share. B) The venture capitalist will pay the highest price per share. C) The entrepreneur will pay the highest price per share. D) The angel investor will pay the highest price per share.