Question

Stock that has been issued but later reacquired by the issuing corporation is referred to as:

a. Treasury Stock
b. Preferred Stock
c. Authorized Stock
d. Issued and Outstanding Stock

Answer 1

The correct answer to the question is: a. Treasury Stock.

Step-by-step explanation:

Treasury stock refers to shares that have been issued by a company and then repurchased. This repurchase can occur for several reasons, such as to reduce the amount of outstanding stock on the open market, to use the shares for employee compensation plans, or to prevent other shareholders from gaining a controlling interest.

A company might initially issue stock as a way to raise financial capital for expansion without the need to repay the funds, which is an advantage compared to borrowing. However, selling off company ownership through an initial public offering (IPO) also means that the company must take into account the interests of its shareholders, and comply with additional regulatory requirements, like those imposed by the federal Securities and Exchange Commission (SEC).