Identify three reasons why a firm might buy back its own common stock shares
What will be an ideal response?
A stock repurchase (stock buyback) occurs when a firm repurchases its own stock. This results in a reduction in the
number of shares outstanding. Several reasons have been given for stock repurchases. The benefits include:
• A means for providing an internal investment opportunity
• An approach for modifying the firm's capital structure
• A favorable impact on earnings per share
• The elimination of a minority ownership group of stockholders
• A minimization of the dilution in earnings per share associated with mergers
• A reduction in the firm's costs associated with servicing small stockholders
• A potential tax advantage of a stock repurchase, as opposed to a cash dividend, from the shareholders' perspective.
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Which of the following statements regarding exposure is NOT true?
A) It is measured in degrees. B) It is measured in units. C) It is the risk assumed by the insurer. D) It is used to determine insurance premiums."
Which of the following assumptions does not belong in a list of characteristics of lean production?
A) labor is more costly than machines B) set up time can be reduced C) minimize inventory to cut costs and wastage D) maximize backwards integration E) inspection to prevent defective production