Which
of the following is NOT
true? If directors think that the share is undervalued, then it makes sense to
buy back shares:

Question

Which
of the following is  NOT
 true? If directors think that the share is undervalued, then it makes sense to
buy back shares:

Accepted Answer

It could have a negative effect on the stock price since investors could interpret
it as a sign that the firm is trying to manipulate the stock price

Answer

This will be interpreted as a signal that the share is currently cheap and will
potentially boost the share price

Answer

The shares bought back will be cheap since the stock is currently undervalued

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