When a corporation engages in a 10% stock repurchase,it:
A) offers shareholders 110 shares for every 100 they currently own.
B) purchases for cash 10% of the outstanding shares.
C) sells treasury stock at a 10% discount to investors.
D) purchases 10% of previously issued stock dividends.

Question

Quizplus · Accepted Answer

When a corporation engages in a 10% stock repurchase, it purchases for cash 10% of the outstanding shares. This means that the corporation buys back 10% of the shares that are currently held by the public. The purpose of a stock repurchase is to reduce the number of outstanding shares, which can increase earnings per share and improve the stock price.

When a Corporation Engages in a 10% Stock Repurchase,it