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How does a share buyback affect earnings per share (EPS)?
  • a)
    It reduces EPS due to a decrease in cash assets.
  • b)
    It has no impact on EPS.
  • c)
    It increases EPS by distributing the same dividend amount among fewer shares.
  • d)
    It increases EPS by distributing higher dividends to shareholders.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
How does a share buyback affect earnings per share (EPS)?a)It reduces ...
A share buyback increases earnings per share (EPS) because the same dividend amount is distributed among fewer shares. This consolidation of shares results in a higher EPS, which can be appealing to investors and may positively impact the company's stock price.
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How does a share buyback affect earnings per share (EPS)?a)It reduces EPS due to a decrease in cash assets.b)It has no impact on EPS.c)It increases EPS by distributing the same dividend amount among fewer shares.d)It increases EPS by distributing higher dividends to shareholders.Correct answer is option 'C'. Can you explain this answer?
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