Firms can repurchase shares in the following ways:
I. Open market repurchase
II. Through a tender offer
III. Through a Dutch auction process
IV. Through direct negotiation with a major shareholder
A) I only
B) II only
C) III only
D) I, II, III, and IV

Question

Quizplus · Accepted Answer

Firms can repurchase shares through any of the mentioned ways. Open market repurchase is the most common form where the firm buys its own shares from the open market. Tender offer is a public offer by the firm to buy a specific number of shares at a specific price directly from the shareholders. Dutch auction process is a type of tender offer where the firm announces a range of prices and shareholders decide if they want to sell their shares at a particular price or not. Direct negotiation with a major shareholder is a private agreement between the firm and the shareholder where the shareholder sells the shares directly to the firm. Therefore, all four ways are viable options for firms to repurchase shares.

Firms Can Repurchase Shares in the Following Ways