Which of the following is an advantage of stock repurchases?

Question

Quizplus · Accepted Answer

Stock repurchases provide a form of defense against a potential takeover attempt, as they reduce the number of shares outstanding and make it more expensive for an acquiring company to obtain a controlling interest. Additionally, it can also increase the earnings per share for remaining shareholders. Option A is incorrect as stock repurchases may indicate that the company has excess cash and believes that buying back shares is a good investment decision. Option B is incorrect as companies can distribute excess cash through stock repurchases. Option C is incorrect since a company may repurchase shares on a regular basis as part of its capital management strategy. Option E is also incorrect because employee stock options can be adjusted to reflect the stock repurchase.

Which of the Following Is an Advantage of Stock Repurchases