Repurchasing shares near year-end will increase a firm's return on equity (ROE). Select one: True False. g

Question

Business

Alison Petty

28 February, 02:23

Repurchasing shares near year-end will increase a firm's return on equity (ROE). Select one: True False. g

+3

Answers (1)

Know the Answer?

Caden Paul · Answer 1

True

Explanation:

Return on equity calculated by dividing net income with total outstanding shares. When you repurchase shares total outstanding shares are reduced by the quantity purchased. Assuming the net income is constant the Return on equity will be higher as now net income is being divided by the lesser number of shares. So this is a true statement.