Redemption of shares generally results in an increase of treasury stock.

Question

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When a company redeems its shares, it buys them back from shareholders and cancels them. This reduces the outstanding shares and increases the ownership percentage of each remaining shareholder. However, if the company holds on to these redeemed shares instead of canceling them, they are considered treasury stock. Therefore, redemption of shares generally results in an increase of treasury stock.

Redemption of Shares Generally Results in an Increase of Treasury