SIE Exam Question 451: Answer and Explanation

Question: 451

It may be necessary for a company to repurchase some of its stock, to increase its treasury stock, for which one of the following reasons:

• A. To increase the funding in the company's treasury.
• B. To allow the company to pay out smaller dividends.
• C. To reassure its investors that all is well.
• D. To maintain control of the company.

Correct Answer: D

Explanation:

D: In addition to maintaining control, a company may want to increase its earnings per share, fund employee stock option plans, or use shares to pay for a merger or acquisition.