A stock repurchase plan that involves issuing long-term debt to fund the purchase of the company's stock may be used as a way to alter a corporation's capital structure.

Question

Quizplus · Accepted Answer

By issuing long-term debt, the company increases its debt-to-equity ratio, which alters the capital structure by increasing the proportion of debt financing relative to equity financing. This can have various impacts on the company's financial performance and risk profile.

A Stock Repurchase Plan That Involves Issuing Long-Term Debt to Fund