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3. Dividends versus stock repurchases Aa Aa Ignoring possible tax effects and signaling costs, the total value of a firm's equity remains the same irrespective

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3. Dividends versus stock repurchases Aa Aa Ignoring possible tax effects and signaling costs, the total value of a firm's equity remains the same irrespective of how the firm distributes its residual earnings-dividends or stock repurchases. Each distribution method has certain advantages and disadvantages. Based on your understanding of dividends and stock repurchases, select the best terms to go with the statements. Select the best term to complete the sentence Undervalued Overvalued Management is likely to repurchase stock if it believes that the stock is ????; this sends positive signals to investors. False True Repurchases allow a firm to buy back as much stock as it wants, at whatever price it wants, without affecting shareholders. This statement is ???3? Avoid Encourage Management tries to maintain consistent, regular dividend distributions to ???? any dividend cuts in the future and prevent a negative signaling effect. Cash Additional stock Repurchases allow investors who need cash to convert their investment in the company into

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