SIE practice questionhardTreasury Stock
Effects of repurchasing stock and holding it as treasury stock include:
- AReducing shares outstanding and increasing earnings per share.✓ Correct answer
- BIncreasing the number of voting shares.
- CEnabling payment of dividends to the company itself.
- DRaising the company’s book value.
Explanation
Why A — Reducing shares outstanding and increasing earnings per share.
Buying back shares reduces shares outstanding, thus raising EPS. It does not increase voting shares, pay dividends to itself, or automatically raise book value.
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