A company wants to buy-back stock. How will this impact the company and its stock ?

CS Executive · Financial and Strategic Management · PYQS · December 2024
A company wants to buy-back stock. How will this impact the company and its stock ?
(A) The price of the shares is expected to rise as there will be fewer shares in the open market
(B) The company makes more money because management owns more stock
(C) The net income of the company will go up because of the increase in stock price
(D) Other investors make less money because management can pay more dividends to internal shareholders before external shareholders

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Financial Management

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