Buyback of Securities & Differential RightsMCQQuestion 5720 of 6
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What is the primary purpose of a buyback of securities?

Options

ATo increase the market value of the company's shares
BTo reduce the number of shareholders
CTo return surplus cash to shareholders
DTo acquire a controlling interest in another company
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Correct Answer

✅ Option C — To return surplus cash to shareholders

All Options:

  • ATo increase the market value of the company's shares
  • BTo reduce the number of shareholders
  • CTo return surplus cash to shareholders ✓
  • DTo acquire a controlling interest in another company

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Detailed Solution & Explanation

Buyback of securities is a mechanism by which a company can return surplus cash to its shareholders. This can be done to reduce the equity base of the company, thereby increasing the earnings per share and return on equity.
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More Questions from Buyback of Securities & Differential Rights

Which of the following is a requirement for a company to buy back its securities under the Companies Act, 2013?

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Analyse the implications of buyback of securities on the financial statements of a company.

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