Question

Which of the following does NOT affect the cash balance of a firm?

Question 3 options:

	Stock buy backs
	Dividend payouts
	Stock price falling
	All of the above affect the cash balance of a firm

Part 2:

Which of the following is a payout from a company to the shareholders?

Part 2 Options:

	Issuance of bonds
	Repayment of bonds
	Stock buybacks
	New stock issuance

Answer 1

Question 1: Answer - Stock price falling

Stock buy backs implies company would pay cash to shareholders in return for their share holdings, hence this would impact the cash balance. Dividend payouts also implies paying dividends (from cash) at company and hence would affect cash balance. However, stock price falling does not have any impact on cash balance of company.

Question 2: Answer - Stock buybacks

Issuance and repayment of bonds implies payment of bonds to debt holders only. Stock buybacks implies company would pay cash to shareholders in return for their share holdings, hence this would impact the cash balance and is also a payout from company to shareholders.