If a company's stock is temporarily undervalued, repurchasing shares can be beneficial to the remaining stockholders.

Question

Quizplus · Accepted Answer

Repurchasing shares reduces the number of outstanding shares, which can increase the value of the remaining shares, benefiting the remaining stockholders. If the stock is undervalued, repurchasing shares at that price is seen as a smart strategic move by the management team.

If a Company's Stock Is Temporarily Undervalued, Repurchasing Shares Can