Question

1.Stock repurchases sends a positive signal that management believes that the current price is low

True or False

2. The bonds offered by Leo pumps are callable in 3 years at a quoted price of 101. what is the amount of the call premium on a $1000 par value bond ?

select one:

a) $10,00

b) $ 5.00

c) $ 3.33

d) $ 13.33

Answer 1

1. A share repurchase or buyback is when a publicly traded company purchases its own shares in the marketplace. Along with dividends, share repurchases are a way that a company may return cash to its shareholders. When a company buys back shares, it's generally a positive sign because it means that the company believes its stock is undervalued and is confident about its future earnings. ( True).

2. Option ( a) is correct.

• Call premium = ( 1.01* $1000 ) - $1000

= 1010-1000

= $ 10.00

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