3. Dividends versus stock repurchases 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 Repurchase stock Distribute dividends Excess cash or a desire to recapitalize usually leads management to ?777. False True Repurchases are more dependable than dividends because the investor wealth does not decrease after a repurchase, whereas the stock price decreases when dividends are distributed. This statement is 777 True False Dividends provide signals about a firm's future prospects whereas some investors might misinterpret why a firm is repurchasing stock. This statement is ?777 Cash Additional stock Repurchases allow investors who need cash to convert their investment in the company into ?777