With a Stock Repurchase

question 65

Multiple Choice

With a stock repurchase:

• A)no cash flow is extended from the company.
• B)the company obtains some of its stock, and the value of the firm drops.
• C)shareholders' ownership in the company will decrease.
• D)the equity of the firm will increase.

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Definitions:

Existing Stockholders

Individuals or entities that currently own shares in a company.

Subscription Price

The cost at which existing shareholders can buy additional shares of a company, often at a discount.

Rights Offering

A financial mechanism by which companies offer existing shareholders the right to buy additional shares directly from the company at a predetermined price, usually at a discount, before the shares are offered to the public.

Value Of A Right

In finance, the value associated with a right, such as a stock right, which is the value to buy additional shares at a discounted price.