Which of the following statements would not explain why a company may want to repurchase its stock?
A)To demonstrate to investors that it believes its own stock is worth purchasing.
B)To obtain shares to reissue to employees as part of an employee stock plan.
C)To obtain shares that can be reissued as payment for purchase of another company.
D)To increase the number of shares of outstanding stock.

Question

Quizplus · Accepted Answer

A corporation may want to repurchase its stock from existing stockholders to send a signal to investors that the company itself believes its own stock is worth acquiring,obtain shares that can be reissued as payment for purchases of other companies,obtain shares to reissue to employees as part of employee stock purchase plans,and reduce the number of outstanding shares to increase per-share measures of earnings and stock value.The repurchase of stock decreases (rather than increases)the number of shares outstanding.

Which of the Following Statements Would Not Explain Why a Company