A firm may repurchase stock in the market because:

Question

Quizplus · Accepted Answer

The firm may repurchase stock in the market because it has inadequate capital budgeting alternatives. This means that the firm may not have attractive investment opportunities at the moment and instead of holding excess cash, they may decide to return some of that cash to shareholders through share repurchases. This can increase shareholder value by reducing the number of shares outstanding and increasing earnings per share.

A Firm May Repurchase Stock in the Market Because