In the aggregate, over time dividend payments tend to fluctuate more than share repurchases. True or...

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In the aggregate, over time dividend payments tend to fluctuate more than share repurchases. True or...

In the aggregate, over time dividend payments tend to fluctuate more than share repurchases. True or False

business finance

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Answer 1

Answer #1

the statement is false .

Dividends are not affected by the temporary changes in the earnings ,but are only affected by the permanent changes in the earnings of the firm .

On the other hand share repurchases are affected by both the temporary and the permanent change in the earnings of the firm.

Buyback is a substitute to dividends ,when firm's temporary earnings change then there is a dramatic change in the share repurchase activity ,but dividends change slightly only to a response to permanent changes in the earnings of the firm.

The number of stock repurchases have increased significantly and is more fluctuating than dividend payments.

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Answer 2

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