When a firm buys back outstanding shares of common stock, the price of the company's shares increases.
Common stock is a security that represents ownership in a corporation. In a liquidation, common stockholders receive whatever assets remain after creditors, bondholders, and preferred stockholders are paid.
Companies of all sizes buy back their own stock for a number of reasons, such as to try to pump up the share price or to insulate the company from the possibility of a hostile takeover. When a company repurchases stock, it can affect the value of the remaining outstanding shares, the payment of dividends and even control of the company itself.
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