CFA Level I · CFA Level I Exam · Equity Instrument Features
A company repurchases some of its common shares and holds them rather than cancelling them. These shares are best described as:
These shares are treasury shares: they were issued, then bought back and held by the company. They are not outstanding, so they carry no voting or dividend rights, and they differ from authorized but unissued shares, which were never sold.
- Aauthorized but unissued shares
- Btreasury sharesCorrect
- Cshares outstanding
Explanation
Shares that were issued and later repurchased by the company, and are held by it, are treasury shares. They are issued but not outstanding, and they carry no voting or dividend rights while held by the company.
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