A Company Would Repurchase Its Own Stock for All of the Following

question 29

Multiple Choice

A company would repurchase its own stock for all of the following reasons except

• A)it needs the stock for employee bonuses.
• B)it wishes to make an investment in its own stock.
• C)it wishes to prevent unwanted takeover attempts.
• D)it wishes to improve the company's financial ratios.

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Definitions:

Risk-Free Rate

The theoretical rate of return of an investment with no risk of financial loss, often represented by the yield on government bonds.

Systematic Risk

The risk inherent to the entire market or market segment, unmitigable through diversification, often related to economic, political, or societal factors.

Market Risk

The potential for an investor to experience losses due to factors that affect the overall performance of the financial markets.

Large Number of Assets

Refers to having a substantial amount of different assets, typically to diversify and reduce risk.