Stock repurchase plans: what are the reasons and effects?
Not what you're looking for?
1. Why do corporations buy back their own stock?
2. What does it tell you about the corporation?
3. What effect does the purchase have on the price of a company's stock?
Purchase this Solution
Solution Summary
The cited solution includes a number of positive and negative reasons why a company might want to buy-back, or repurchase, their own stock in the marketplace. The reasons include markets perceptions as well as technical results.
Solution Preview
1. Corporations aggressively buy back stock for several reasons, but primarily to support the market price of the company stock. Prices of common stock tend to increase when there is increased buying activity. It may not matter who is buying the stock, but simply the fact that there is market interest in a company. But then there are more technical reasons to buy back stock:
a. Reducing the number of shares available can affect certain financial ratios which are used by lenders and investors. ...
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Introduction to Finance
This quiz test introductory finance topics.