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      Question

      Which of the following increases when a firm repurchases

      its own shares (treasury shares) and no other change occurs?
      A Shareholders’ funds increase Correct Answer Incorrect Answer
      B Number of outstanding shares decreases Correct Answer Incorrect Answer
      C Par value per share increases Correct Answer Incorrect Answer
      D Paid-up capital increases Correct Answer Incorrect Answer

      Solution

      When a company buys back its own shares, the number of shares outstanding in the market decreases. Shareholders' funds and total assets decrease by the buyback amount.

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