A corporation may wish to repurchase some of its shares for all of the following reasons EXCEPT:
A) The stock may be needed for future mergers.
B) The corporation's executives will financially benefit if the stock is resold later at a substantial profit.
C) It can stabilize or increase the market price of the stock.
D) The stock may be needed for an employee compensation plan.

Question

Quizplus · Accepted Answer

All of the options, except for option B, are valid reasons for a corporation to repurchase some of its shares. Option B, which states that executives will financially benefit if the stock is resold later at a substantial profit, is not a valid reason as it can be seen as unethical and goes against the interests of other shareholders.

A Corporation May Wish to Repurchase Some of Its Shares