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QUESTION 2 Which of the following is correct under the assumption of perfect capital markets? When a company performs a stock buyback, the stock price
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Which of the following is correct under the assumption of perfect capital markets?
When a company performs a stock buyback, the stock price increases and when a company pays a dividend, the stock price is unaffected.
Stock buybacks and dividend payments do not affect the stock price.
When a company pays a dividend, the stock price falls by the amount of the dividend and when a company performs a stock buyback, the stock price is unaffected.
Stockholders always prefer stock buybacks over dividend payments because the stock price is unaffected.
Stockholders always prefer dividend payments because they can use the cash to invest in other stocks.
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