* Your answer is incorrect.A company may repurchase its own shares for all of the following reasons, exceptO to reduce the number of shares issued and thereby increase earnings per share and return on equity.to have additional shares available for use in the acquisition of other companies.O to attempt to influence the market price of the shares.O to reduce the number of shares issued in order to meet debt to equity bank covenant requirements.

Repurchase of shares refers to the business activity through which the company buys back its own…

Answered: A company may repurchase its own shares…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Which of the following is not an advantage of going public? a. Access to capital. b. Compliance. c. Use of stock options. d. Liquidity for owners’ investments
A corporation that uses debt concentrates the risks of the business on the ___________.
How do you think each of the following items would affect a company’sability to attract new capital and the flotation costs involved in doing so?a. A decision of a privately held company to go publicb. The increasing institutionalization of the “buy side” of the stock andbond marketsc. The trend toward financial conglomerates as opposed to stand-aloneinvestment banking housesd. Elimination of the preemptive righte. The introduction in 1981 of shelf registration of securities
The declaration and issuance of a stock dividend results in a reduction of the issuing corporation's total stockholders' equity. True or False
It is not unusual for some company investments to carry cumulative dividend rights. Which of the following statements about the declaration of cumulative dividends is correct? A. They are paid when profits are available for that purpose B. They are paid out of capital C. They are paid in the form of a bonus issue D. They are not paid until profits reach a certain percentage
Firms raise capital from investors by issuing shares in the primary markets. Does this imply that corporate financial managers can ignore trading of previously issued shares in the secondary market?
What is the advantage of issuing bonds instead of obtaining financing from the company’s owners?
subject (corporate finance)
1. When the firm gets acquired by a better fundamental company, does that increase, decrease, or have no effect on the credit spread for a corporate bond?
A bank that seeks to increase its risk-adjusted capital ratio has a number of options at its disposal including: Issue new equity, such as through a rights issue to existing shareholders, an equity offering on the open market, or by placing a bloc of shares with an outside investor. Increase retained earnings by reducing the share of its profit it pays out in dividends. Reduce its risk-weighted assets by replacing riskier loans with safer ones or with government securities. Chose 1 option from below:Only I is correct. Only II is correct. I and II are correct. Only III is correct. I, II and III are correct. Thanks!
Explain the concept of ‘buying back of shares by a company. What are the effects of such a buy-back? What are the advantages of a ‘buy-back’ of shares of a company? Give a few examples from the real-life situations where companies did a buy-back of shares. What were the reasons behind such a buy-back and how did it benefit the companies?
For what reason might a company purchase treasury stock? To increase shareholder liquidity To execute an acquisition through a share exchange To increase the number of outstanding shares of stock To reduce future income taxes

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