Stock repurchases 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: Smith and Martin Co. 's board of directors has decided to repurchase some of its stock on the open market because the company has received a large, one-time cash flow, and it believes that the company's stock is undervalued. What is the company's motivation for the stock repurchase? To distribute excess funds to stockholders To protect against a takeover attempt To adjust the firm's capital structure To acquire shares needed for employee options or compensation Which of the following statements would be considered advantages of a stock repurchase? Check all that apply. Stock repurchases are an effective way to change the firm's capital structure when the amount of equity in the current capital structure is significantly greater than the firm's target capital structure. A stock repurchase can be used to minimize the dilution effect associated with employees exercising their stock options. The interval between stock repurchases tends to be irregular, which means that investors cannot always count on cash inflows from repurchases