Accounting · Share Buyback
Assertion: A company can buy back its own shares from the open market or from existing shareholders by utilizing its free reserves, securities premium account, or the proceeds of a fresh issue of shares. Reasoning: The primary objective of a share buyback is often to return surplus cash to the shareholders, increase the Earnings Per Share (EPS), and prevent hostile takeovers by increasing the promoters' percentage of holding in the company's equity.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Assertion is false but Reasoning is true.
- 2Assertion is true but Reasoning is false.
- 3Both Assertion and Reasoning are true but Reasoning is not the correct explanation of Assertion.
- 4Both Assertion and Reasoning are true and Reasoning is the correct explanation of Assertion.✓
Correct answer
Both Assertion and Reasoning are true and Reasoning is the correct explanation of Assertion.
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