A firm may announce its intention to buy its own shares in the open market like any other investor, also known as a(n) ________.
A) open market repurchase
B) tender offer
C) targeted repurchase
D) greenmail

Question

Quizplus · Accepted Answer

An open market repurchase is when a firm announces its intention to buy its own shares in the open market like any other investor. This is different from a tender offer, which is a direct offer to purchase a specific number of shares from shareholders at a premium price, and a targeted repurchase, which is when a firm buys shares from a specific shareholder or group of shareholders. Greenmail, on the other hand, is when a hostile acquirer buys a significant stake in a company and threatens a hostile takeover, prompting the company to buy back the shares at a premium to avoid the takeover. None of the options except A match the given description.

A Firm May Announce Its Intention to Buy Its Own