During the 2008-2009 financial crisis, the stock market plummeted, and many companies tried to take advantage of the depressed prices by buying back large amounts of their own stock. Amazon, for example, authorized a $2 billion stock buyback and borrowed to finance it, even though its shares were trading at 45 times the company's earnings. On the other hand, as the stock market plummeted in response to the COVID-19 pandemic in Spring 2020, many companies backed off from planned stock repurchases. AT&T, for example, canceled a $1 billion stock buyback in March 2020.

INSTRUCTIONS:
a. Provide reasons why companies are less likely to engage in stock repurchase programs during economic downturns.
b. What is meant by a stock selling for "45 times" the company's earnings?
c. Netflix borrowed to finance share repurchases. How would this sequence of events affect its leverage position?
d. If companies reissue previously purchased treasury stock at prices that differ from the costs of the repurchases, are gains and losses recognized on the income statement? Why or why not?