Which of the following considerations should NOT be related to management's concerns when setting a dividend or stock repurchase policy?
A) Over the long term, how much does the company's level of earnings exceed its investment requirements? How certain is this level?
B) Is the stock currently undervalued? Can the management add value to the company by initiating a stock repurchase?
C) Does the firm have enough financial reserves to maintain the dividend policy in periods when earnings are down or investment requirements are up?
D) Can the firm quickly raise equity capital if necessary?
Answer: B
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