A company may reacquire its own shares for all of the following reasons EXCEPT
A) to increase trading in the company's shares in hopes of enhancing its market value.
B) to reduce the number of shares issued thereby increasing earnings per share.
C) to hold the shares as a long-term investment.
D) to have additional shares available for use in the acquisition of other companies.

Question

Quizplus · Accepted Answer

Holding its own shares as a long-term investment is not a reason for a company to reacquire its shares because when a company buys back its shares, those shares are either retired or held as treasury shares. They are not considered an investment in the traditional sense, as companies cannot invest in themselves.

A Company May Reacquire Its Own Shares for All of the Following