- 20 Marks
FM – L2 – Q120 – Corporate Restructuring
Discuss advantages of management buy-outs and features of share repurchases and splits, including their effects on share price vs. dividends.
Question
(a) Briefly discuss the potential advantages of management buy-outs.
(b) Discuss the main features of the following and explain why companies might use them:
(i) corporate share repurchases (buy-backs); and
(ii) share (stock) splits;
Include in your discussion comment on the possible effects on share price of share repurchases and share (stock) splits in comparison to the payment of dividends.
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