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Suppose a firm has 800,000 shares of stock currently outstanding. Each share currently has a true value of $20. Suppose the firm uses internal cash to repurchase 200,000 shares of stock at the following prices: $25, $20, and $15. What will be the effect of each of these alternative repurchase prices on the final(i.e., after the market realizes the true value of shares) market price of the shares.? (Ignore issues such as taxation and transactions costs)

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91233561

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