Question

In which of the following situations might a stock repurchase result in increased firm value? when...

In which of the following situations might a stock repurchase result in increased firm value?

when a firm executes a targeted repurchase in order to buy back shares from specific shareholders at above-market prices

Stock repurchases never increase or decrease the value of the firm

when a firm without any positive NPV projects executes a repurchase to distribute excess cash flow to the shareholders

when a firm does an open market, rather than an auction-based, repurchase
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Answer #1

When a company without any positive net present value projects goes on to distribute it's cash to the shareholders through share repurchase process, it will lead to increase in the overall value of the forym because at least there would be no loss on the part of the company as all those probabilities of negative net present value projects will be eliminated.

Other options are not correct as they are stating irrelevant answers.

Correct answer is option ( C).

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