QUESTIONS 69 THROUGH 78 RELATE TO CORPORATE FINANCE

72. - MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING 2013
MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING 2013

72. A firm’s price-to-earnings ratio (P/E) is 12.5. The firm has decided to repurchase shares using

external funds that have an after-tax cost of 9%. After the repurchase, the earnings per share (EPS)

will most likely:

A.

increase.

B.

decrease.

C.

remain unchanged.