Question

suppose the activist investor, carl icahn, purchases a large number of outstanding apple shares and then demands that tim cook, the ceo of apple, return capital to investors. how can tim cook return some of apples cash to shareholders?
pay down debt
repurchase outstanding shares (i.e., share buybacks)
pay dividends
both share buybacks and dividend payments would satisfy carl icahns request, but paying down debt would not

Explanation:

Paying down debt does not directly return cash to shareholders. Share buy - backs reduce the number of outstanding shares and can increase the value of remaining shares for shareholders. Paying dividends distributes cash directly to shareholders. Both share buy - backs and dividend payments return cash to shareholders.

Answer:

D. Both share buybacks and dividend payments would satisfy Carl Icahn's request, but paying down debt would not