When a company buys back its own common stock it is engaging in a

Question

Quizplus · Accepted Answer

When a company buys back its own common stock, it is engaging in a stock repurchase. This means that the company is using its own cash or borrowing money to buy back shares of its own stock from the public or from existing shareholders. This can be done for a variety of reasons, such as to signal confidence in the company's future performance, to increase earnings per share, or to prevent a hostile takeover. It can also be seen as a way to return value to shareholders who would rather receive cash than hold onto their shares.

When a Company Buys Back Its Own Common Stock It