Drawback of stock repurchases, Finance Basics

Assignment Help:

Drawback of Stock Repurchases

1. High price

A company may find it not easy to repurchase shares at their recent value and price paid may be higher to the detriment of remaining shareholders.

2. Market Signaling

Despite director's effort at trying to convince markets or else, a share repurchase may be interpreted because a signal suggesting such the company lacks proper investment opportunities. This may be interpreted like a sign of management failure.

3. Loss of investment income

The interest such could have been earned from investment of additional cash is lost.


Related Discussions:- Drawback of stock repurchases

Potential investors - measuring business performance, Potential Investors -...

Potential Investors - Measuring Business Performance Potential investors These parties are interested in a company in total both on long and short term basis in particula

Compute the risk premium for the stock, Compute the risk premium for the st...

Compute the risk premium for the stock of Omega Tools if the risk free rate is 6%, the expected market return is 12%, and Omega's stock has a beta of .8.    Ome

Competitors and general public, Competitors and General Public - Measuring ...

Competitors and General Public - Measuring Business Performance Competitors These are interested in the company's presentation from the market share point of view and wi

Calculate the current ratio, For each of the financial statement ratios lis...

For each of the financial statement ratios listed below calculate the ratio for the current year and for the prior year. (Note that in most textbooks, some of the ratios call for a

Finance Problems, 1.) Assume a $1000 face value bond has a coupon rate of 8...

1.) Assume a $1000 face value bond has a coupon rate of 8.5 percent, pays interest semi-annually, and has an eight-year life. If investors are willing to accept a 10.25 percent rat

Pursuing self esteem ambitions and creative accounting, Pursuing self estee...

Pursuing self esteem ambitions and Creative Accounting Pursuing power and self esteem ambitions This is called "empire building" to enlarge the firm via acquisitions and me

Average rate of return - down payment, 1.  Determine what is the future val...

1.  Determine what is the future value of $20 a week for 10 (ten) years at 6 percent interest? Assume the first payment takes place at the end of this week. 2.  Kristina started

Calculate the price of a non-zero coupon bond, Question: A non-zero cou...

Question: A non-zero coupon bond carries a coupon rate of 8 percent and has 9 years until maturity. It sells at a yield to maturity of 6 percent. The par value of the bond is

Accept or reject rule of npv, Accept or Reject Rule of NPV Under this ...

Accept or Reject Rule of NPV Under this method, a company should accept an investment venture if N.P.V. is positive that is if present value of cash outflows exceeds such of c

Accounts payable turnover ratio, Accounts Payable Turnover Ratio Ratio...

Accounts Payable Turnover Ratio Ratio for Account Payable Turnover is as Follow: Creditors/accounts payable turnover = Annual credit purchases /Average creditors

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd