Enhancement of shareholder value through stock repurchase is achieved by
A) sending a positive signal to investors in the marketplace that management believes that the stock is undervalued.
B) reducing the number of shares outstanding and thereby raising earnings per share.
C) providing a temporary floor for the stock price, which may have been declining.
D) all of the above.

Question

Quizplus · Accepted Answer

All of the above options are correct. Stock repurchase sends a signal to investors that management believes the stock is undervalued and can potentially attract more investors. Reducing the number of shares outstanding increases the company's earnings per share, making it more attractive to investors. Stock repurchase also provides a temporary floor for the stock price, which can prevent a further decline in the stock price.

Enhancement of Shareholder Value Through Stock Repurchase Is Achieved by