The effect of a share buy- back is similar to:
A)Payment of a share dividend
B)A share split
C)Issue of bonus shares
D)Payment of a cash dividend

Question

Quizplus · Accepted Answer

A share buy-back usually involves a company repurchasing its own shares from the open market, thereby reducing the number of shares outstanding. This has the effect of increasing the value of the remaining shares, similar to a cash dividend payment. However, unlike a dividend payment or bonus issue, a share buy-back does not increase the number of shares outstanding. It is also different from a share split, which increases the number of shares outstanding and reduces their value.

The Effect of a Share Buy- Back Is Similar To