When a firm purchases its own stock in the open market, the repurchased shares become known as ____.
A) treasury stock
B) preferred stock
C) option stock
D) reinvestment stock

Question

Quizplus · Accepted Answer

When a firm purchases its own stock in the open market, the repurchased shares become known as treasury stock. This stock is not considered as outstanding and therefore, it does not receive dividends or have voting rights. The purpose of repurchasing stock could be to increase earnings per share or to support the company's stock price.

When a Firm Purchases Its Own Stock in the Open