TOPIC 3 - PART A

What are common corporate finance strategies employed by companies?

• Issuing insurance policies and contracts

• Issuing patents and copyrights

• Issuing bonds and loans

• Issuing shares and debentures

What is the purpose of redeeming shares?

• To increase share capital

• To reduce debt

• To increase debt

• To reduce share capital

What does the redemption of debentures involve?

• Repaying the principal amount only

• Repaying the interest only

• Repaying the principal amount along with any accrued interest

• Repaying the interest along with any accrued principal

What is another term for share buyback?

• Share dilution

• Share repurchase

• Share merger

• Share issuance

What can share buybacks potentially lead to?

• Decrease in earnings per share

• Increase in earnings per share

• Decrease in shareholder value

• Increase in shareholder value

What is the purpose of issuing redeemable preference shares?

• To reduce shareholder value

• To offer a fixed income stream like bonds

• To increase shareholder value

• To raise long-term capital

How are redeemable preference shares classified on a company's balance sheet?

• As an asset

• As a revenue

• As equity

• As a liability

What happens to the treasury stock account when shares are repurchased?

• It is credited

• It is debited

• It is deleted

• It remains unchanged

What is the main reason for companies to engage in share buybacks?

• To benefit employees

• To signal undervaluation

• To reduce shareholder control

• To increase long-term investments

What is the impact of share buybacks on shareholders?

• Increase in EPS

• Decrease in EPS

• Increase in stock prices

• Decrease in stock prices