Question
Consider the following information to answer subsequent questions. AZ&Z has $10,000 excess cash. INPV=0, TOInc=TKG(=0%) The firm has 10,000 shares out and the current stock
Consider the following information to answer subsequent questions.
- AZ&Z has $10,000 excess cash. INPV=0, TOInc=TKG(=0%)
- The firm has 10,000 shares out and the current stock price is $5
The CFO is considering what to do with the cash:
- Do nothing
- Pay out via dividends
- Pay out via a share repurchase
You are an investor in AZ&Z; you have 1 share. Ignore distortions: agency, asymmetric information, signaling
- What is your total wealth if the firm buys shares and you sell?
- What is your total wealth if the firm buys shares but you do not sell?
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Bond Markets Analysis And Strategies
Authors: Frank J. Fabozzi
6th Edition
0131986430, 9780131986435
