Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
3rd Edition
ISBN: 9780133507676
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Chapter 17, Problem 3CT
Summary Introduction

Share repurchase: Share repurchase is the situation when a corporation purchases back its own shares because the company noticed that the shares are undervalued. This decline the number of shares left and enhances the value of the shares of the corporation. The share repurchases increase the corporation’s earnings for a share.

Dividend: The amount that shareholders receive in return of their investment is called as a dividend. The dividend is paid according to the number of share of each shareholder. Preference shareholder receives a fixed rate of dividend but equity shareholders receive dividend only when there is a profit in the company.

To determine:

The method of cash distribution does not matter shareholders.

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