If a firm repurchases its stock in the open market the


1. True or False. If a firm repurchases its stock in the open market, the shareholders who tender the stock are subject to capital gains taxes.

2. An example of direct finance

A.You buy shares in a mutual fund

B. you buy government bond from the US treasury

C. you set aside funds in a special fund in a special bank account to finance retirement

3. If you deposit $ 100 in cash into a checking account at Friedman National, you would increase the bank's liablity to make new loans by

A. $90

B. $100

C. $900

D. $1000

(i.e, $100 mulitplied by the reciprocal of the reserve requirement.

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Financial Management: If a firm repurchases its stock in the open market the
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