Which of the Following Statements Is a Reason Why a Company

question 86

Multiple Choice

Which of the following statements is a reason why a company would buy treasury stock?

• A)Because management believes the market price of the stock is undervalued.
• B)To have stock available to issue to employees in stock option plans.
• C)To avoid a hostile takeover.
• D)All of these are reasons a company would buy treasury stock.

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Definitions:

Financing

The act of providing funds for business activities, making purchases or investing.

Debt

Money owed by one party to another, usually reflected as loans, bonds, or lines of credit that must be repaid with interest.

Cost Of Debt

The effective interest rate that a company pays on its total debt, serving as a measure of the expense of borrowing.

Yield To Maturity

The total return anticipated on a bond if it is held until the maturity date, considering all payments of interest and principal against the current market price.