10. Stock repurchases Aa Aa There are a number of reasons why a firm might want to repurchase its own stock. Read the statement and then answer the corresponding question about the company's motivation for the stock repurchase: Taft and Polk Corp.'s board of directors has decided to repurchase some of its stock on the open market because it wants to increase the company's debt-to-equity ratio What is the company's motivation for the stock repurchase? O To adjust the firm's capital structure O To distribute excess funds to stockholders O To acquire shares needed for employee options or compensation O To protect against a takeover attempt Which of the following statements would be considered advantages of a stock repurchase? Check all that apply stock repurchases are an effective way to alter the firm's capital structure. Stock repurchases are especially effective when the amount of equity in the current capital structure is significantly greater than that required by the firm's target capital structure. The market generally perceives a stock repurchase as a sign that management believes that the firm's stock is undervalued At times, the company will repurchase its stock at a price higher than the true value of the stock