When a Company Repurchases Its Own Common Stock,it Is Likely

question 61

Multiple Choice

When a company repurchases its own common stock,it is likely that

• A) the stock price will increase because the company views the stock as undervalued.
• B) the stock price will decrease because the company is creating artificial demand for its stock.
• C) the stock price will remain the same as this is simply an internal transaction.
• D) the board of directors will be fired for incompetence.

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Definitions:

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured, including costs related to maintenance, utilities, and equipment depreciation.

Raw Materials Inventory

This represents the stock of basic materials awaiting to be processed into finished goods.

Work in Process

Inventory that includes all the materials, labor, and overhead costs for products that are in the production process but not yet completed.

Finished Goods Inventory

Inventory of finished goods available for sale but still unsold.