Which of the Following Statements About Treasury Stock Is True

question 16

Multiple Choice

Which of the following statements about treasury stock is true?

• A)Few corporations have treasury stock.
• B)Purchasing treasury stock is done to eliminate hostile shareholder buyouts.
• C)Companies acquire treasury stock to increase the number of shares outstanding.
• D)Companies acquire treasury stock to decrease earnings per share.

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Definitions:

White Knight

A person or company making a favorable investment in or purchase of a company as a strategic defense against a hostile takeover.

Tender Offer

A public, open offer or invitation by a prospective acquirer to all shareholders of a publicly traded corporation to tender their stock for sale at a specific price during a certain time.

Hostile Takeover

An acquisition attempt by one company of another that is resisted by the target company's management and board of directors.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with the care of money or property.