Managers of firms may consider a stock repurchase or even a leveraged buyout when they believe their stock is ____ by the market, or a secondary stock offering when they believe their stock is ____ by the market.

Question

Quizplus · Accepted Answer

Managers may repurchase stock or initiate a leveraged buyout if they believe the stock is undervalued, as they see it as a good investment. Conversely, they may issue more stock through a secondary offering if they believe it is overvalued, to capitalize on the high valuation.

Managers of Firms May Consider a Stock Repurchase or Even