1. A company, has 12.5 million outstanding shares with a current market price of share € 25. The company has surplus cash of € 75 million. To distribute this surplus cash, the company announces repurchase of shares worth € 75 million at a market price of € 25. Assume that the company is able to purchase all the shares at a market price of € 25. Post share repurchase, the market price shall be closest to
a) € 19
b) € 25
c) € 31
2. Firm A is planning to acquire Firm B. If Firm A prefers to make cash offer for the merger it indicates that:
A) Firm A's managers are optimistic about the post merger value of A
B) Firm A's managers are pessimistic about the post merger value of A
C) Firm A's managers are neutral about the post merger value of A
D) None