- 6 Marks
FM – MAY 2019 – L2 – Q2b – Capital structure
Explain share repurchase and identify situations where it is useful for Mempeasem Ltd.
Question
At a recent Board meeting, the Board Chair of Mempeasem Ltd suggested the need to restructure the capital of their company. The Chair proposed shares repurchase as the option to consider, but the majority of the Board members were hearing this term for the first time. As the Finance Manager, you have been directed to help the Board members to understand this option for decision making.
Required:
- Explain the term share repurchase to a non-finance person. (1 mark)
- Identify FOUR (4) situations under which share repurchase will be useful for Mempeasem Ltd. (5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Capital restructuring, Corporate finance, Share repurchase
- Level: Level 2
- Topic: Capital structure
- Series: MAY 2019
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