- There Are A Number Of Reasons Why A Firm Might Want To Repurchase Its Own Stock Read The Statement And Then Answer The 1 (27.83 KiB) Viewed 28 times
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: Purple Pigeon Bird Seed
Company's board of directors has decided to repurchase some of its stock on the open market because the
company has received a large, one-time cash flow, and it believes that the
company's stock is undervalued. What is the
company's motivation for the stock repurchase? To protect against a takeover attempt To acquire shares needed for employee options or compensation To distribute excess funds to stockholders To adjust the firm's capital structure Which of the following statements would be considered advantages of a stock repurchase? Check all that apply, A stock repurchase can be used to minimize the dilution effect associated with employees exercising their stock options. At times, the
company will repurchase its stock at a price higher than the true value of the stock. Stock repurchases allow a firm to distribute earnings to investors without changing the amount of the regular cash dividend.