CFA® Level II Corporate Issuers - Cash Dividend vs Share Repurchase

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Are you studying for the CFA Level II exam and looking for a clear explanation of the differences between cash dividends and share repurchases? You've come to the right place! In this video, we'll provide an in-depth comparison of these two methods of returning capital to shareholders, and help you grasp their implications for both companies and investors.
💡 We'll begin by defining cash dividends and share repurchases, and then explore the key factors that influence a company's decision to choose one method over the other. We'll discuss the tax implications, signaling effects, and the impact on financial ratios and shareholder value. We'll also touch on the role of dividend policy and payout ratio in the decision-making process.
📈 Our aim is to ensure you have a comprehensive understanding of cash dividends and share repurchases, which is crucial for your CFA Level II exam and your future career in finance. We'll provide real-world examples and illustrate key concepts with easy-to-follow visuals to enhance your learning experience.
📚 To dive deeper into this topic and access a wide range of additional resources tailored specifically for CFA Level II candidates, be sure to visit prepnuggets.com. You'll find practice questions, study guides, and more, all designed to help you conquer the exam with confidence.
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Best of luck with your studies, and here's to acing the CFA Level II exam!

[@MrJoshybunz]

fantastic video, deserves more views

[@PrepNuggets]

Much appreciated!

[@victorsardon3521]

EPS can decrease after a share repurchase regardless of if the repurchase is funded by cash or debt. If funded by excess cash like in this example, depending on what our cash & cash equivalents is earning, if we're in a normal interest rate cycle with positive short-term rates of say 2-3%, this cash might actually be earning money. So using it for a buyback may actually impact Net Income as the income on this cash is not being recognized in Net Income anymore.