Which of the Following Is Not a Practical Motive for Stock

question 89

Multiple Choice

Which of the following is not a practical motive for stock repurchases?

• A) The desire to reduce the amount of the firm's outstanding debt.
• B) Having shares available for employee stock-option plans.
• C) Retiring shares of common stock.
• D) Obtaining shares to be used in acquisitions.
• E) All of the above are practical motives for stock repurchases.

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Definitions:

Price-Earnings Ratio

A valuation metric for companies, calculated by dividing a company's share price by its earnings per share.

Earnings

The amount by which revenues exceed expenses.

Stockholders

Individuals or entities that own shares of stock in a corporation, thereby having a residual claim on the company's assets and earnings.

Solvency

This financial term refers to an entity's ability to meet its long-term financial obligations, indicating financial stability.