8. Stock repurchases Aa Aa There are a number of reasons why a firm might want t

Question

8. Stock repurchases Aa Aa There are a number of reasons why a firm might want to repurchase its own stock. Read the statement and then answer the corresponding question about the company's motivation for the stock repurchase: Washington and Jefferson Inc. is a high-tech company that recently repurchased a number of shares so that it will be able to meet obligations to employees without having to issue any new shares. What is the company's motivation for the stock repurchase? O To protect against a takeover attempt O To distribute excess funds to stockholders O To acquire shares needed for employee options or compensation O To adjust the firm's capital structure Which of the following statements would be considered advantages of a stock repurchase? Check all that apply. Stock repurchases allow a firm to reduce the number of outstanding shares, increase the firm's share price, and make a potential takeover of the company more expensive The interval between stock repurchases tends to be irregular, which means that investors cannot always count on cash inflows from A stock repurchase can be used to minimize the dilution effect associated with employees exercising their stock options. repurchases

Explanation / Answer

Answer 1. To aquire shares needed for employee options or compensation.

Answer 2. Stock repurchases allow a firm to reduce the number of outstanding shares, increase the firm's share price, and make a potential takeover of the company more expensive.

The Interval between stock repurchases tends to be irregular, which means that investors cannot always count on cash inflows from repurchases.

NOTE - These answers stand valid or justified as in the Company law and rest of the answers are Invalid or false. These are the features of a standard buy-back arrangement.

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