A firm may use a stock repurchase .
A)as part of a financial restructuring
B)to dispose of excess cash
C)to reduce overhead
D)as part of a financial restructuring and to dispose of excess cash

Question

Quizplus · Accepted Answer

A stock repurchase can be used as part of a financial restructuring to improve a company's balance sheet or to dispose of excess cash when the company believes its shares are undervalued. Therefore, option D is the best choice as both reasons are valid for a stock repurchase. Options A and B are partially correct, but option D includes both of them. Option C is not a valid reason for a stock repurchase, as reducing overhead is typically achieved through cost-cutting measures rather than a stock repurchase.

A Firm May Use a Stock Repurchase