A stock repurchase program:
A) requires all shareholders to sell a fraction of their shares.
B) is preferred over a high-dividend program only by tax-exempt shareholders.
C) decreases both the number of shares outstanding and the market price per share.
D) has no effect on a company's financial statements.
E) is essentially the same as a cash dividend program provided there are no taxes or other costs.

Question

Quizplus · Accepted Answer

A stock repurchase program is similar to a cash dividend program in that it returns cash to shareholders, assuming no taxes or other costs. However, it reduces the number of shares outstanding, potentially increasing the market price per share.

A Stock Repurchase Program