Reason (s) for stock repurchases include all the following except:to acquire shares used in management stock option incentive programs, in which managers can purchase shares of stock at pre-specified prices. to use in stock-based acquisitions of other firms. the firm has the cash and sees its own stock as one of its most attractive investment alternatives. in order to pay less taxes on before-tax profits

Question

Business

Karsyn Cervantes

9 June, 00:00

Reason (s) for stock repurchases include all the following except:to acquire shares used in management stock option incentive programs, in which managers can purchase shares of stock at pre-specified prices. to use in stock-based acquisitions of other firms. the firm has the cash and sees its own stock as one of its most attractive investment alternatives. in order to pay less taxes on before-tax profits

+4

Answers (1)

Know the Answer?

Andrea Cain · Answer 1

The correct answer is letter "B": to use in stock-based acquisitions of other firms.

Explanation:

The repurchase of stock takes place when a company purchases its own stock on the market and thereby decreases the number of shares outstanding. The company can either buy the shares at the current market price or tender a fixed-price offer to current shareholders. Stock repurchases also allow the firm to cut before-taxes payments. Hardly ever the firm purchases its stock because there are no other attractive investments in the market but it could happen.

However, stock-based acquisitions are those in which a firm purchases another by providing the stakeholders of the target company shares of the new unified company. There is no repurchase of the same company's stock in such a transaction.