Why might a company repurchase its own stock?
A) It believes that the market undervalues its shares
B) To offset dilutive effects of employee stock options granted
C) To recognize an economic gain when the treasury shares are later sold for a profit
D) To improve earnings per share by reducing the denominator
E) All of the above

Question

Quizplus · Accepted Answer

A company might repurchase its own stock for several reasons: it may believe its shares are undervalued (A), want to offset the dilutive effects of stock options (B), potentially sell the shares later for a profit (C), and improve its earnings per share by reducing the number of shares outstanding (D).

Why Might a Company Repurchase Its Own Stock