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) issues 10% more stock but holds the shares as treasury shares.

Question

Quizplus · Accepted Answer

A 10% stock repurchase means the corporation is buying back 10% of the outstanding shares, using cash to do so. Therefore, option B is the correct choice. Option A describes a stock split or stock dividend, option C describes a stock sale, and option D describes a stock issuance which is different from a stock repurchase.

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