9. Stockrepurchases There are a number of reasons why a firm might want to repurchase its own stock. Read the statement

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9 Stockrepurchases There Are A Number Of Reasons Why A Firm Might Want To Repurchase Its Own Stock Read The Statement 1 (34.76 KiB) Viewed 100 times

9. Stockrepurchases There are a number of reasons why a firm might want to repurchase its own stock. Read the statement and then answer the corresponding question about the company's motivation for the stock repurchase: Big Walnut Nut Company's board of directors has decided to repurchase some of its stock on the open market because it wants to Increase the company's debt-to-equity ratio. What is the company's motivation for the stock repurchase? To adjust the firm's capital structure To distribute excess funds to stockholders To acquire shares needed for employee options or compensation To protect against a takeover attempt Which of the following statements would be considered advantages of a stock repurchase? Check all that apply. The interval between stock repurchases tends to be irregular, which means that investors cannot always count on cash inflows from repurchases A stock repurchase can be used to minimize the dilution effect associated with employees exercising their stock options Stock repurchases are an effective way to alter the firm's capital structure. Stock repurchases are especially effective when the amount of equity in the current capital structure is significantly greater than that required by the firm's target capital structure.