One reason a firm may repurchase its own shares is:
A)that management views the firm's future prospects to be bright.
B)to go public.
C)to qualify for an exchange listing.
D)to adhere to SEC requirements on number of shares outstanding.

Question

Quizplus · Accepted Answer

In some cases, management believes the stock is undervalued in the market. Prior research studies indicated that repurchased securities generally underperformed the popular market averages before announcement of repurchase. Thus, management or the board of directors may perceive this to be an excellent opportunity because of depressed prices and the bright future prospects.

One Reason a Firm May Repurchase Its Own Shares Is