Firms with extra money should always repurchase their own stock, thus increasing the value of the firm.

Question

Quizplus · Accepted Answer

While share repurchases can increase the value of a firm in the short-term by boosting earnings per share, it may not be the best use of excess funds in the long-term. Firms should also consider investing in research and development, expanding operations, or paying out dividends to shareholders.

Firms with Extra Money Should Always Repurchase Their Own Stock