Stock repurchases are made for all of the following reasons EXCEPT
A) to decrease the book value of equity.
B) to have shares available for stock option plans.
C) to obtain shares to be used in acquisition.
D) to retire outstanding issues.

Question

Quizplus · Accepted Answer

Stock repurchases are typically made to decrease the number of outstanding shares, which can increase earnings per share and potentially boost stock prices. The reasons listed in options B, C, and D are all common reasons for companies to repurchase their own shares. However, decreasing the book value of equity (option A) is not a common reason for a company to initiate a stock buyback program.

Stock Repurchases Are Made for All of the Following Reasons