If managers believe that their firm's stock price is weak because it is undervalued by the market, they may consider repurchasing a portion of the shares that are outstanding.

Question

Quizplus · Accepted Answer

Managers may opt to repurchase shares when they believe the stock is undervalued to signal confidence in the firm's prospects, potentially increasing the stock price as the supply of shares decreases and demand remains the same or increases.

If Managers Believe That Their Firm's Stock Price Is Weak