Which of the following is NOT true about treasury stock?
A) It is a firm's own shares repurchased in the market by the firm.
B) It can be reissued under stock option and other employee benefit plans.
C) It lowers the value of the company.
D) It increases the net worth of the company.

Question

Quizplus · Accepted Answer

Treasury stock does not necessarily lower the value of the company. In fact, it can increase the value of the company by reducing the number of shares outstanding and thus increasing the earnings per share. However, it is possible that repurchasing shares at a high price could result in a lower overall value for the company.

Which of the Following Is NOT True About Treasury Stock