ACFE CFE-Financial-Transactions-and-Fraud-Schemes Q&A - in .pdf

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A. Storage Explorer
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Answer: C

NEW QUESTION: 3
A sound justification for an entity's repurchase of its own shares e.g. treasury shares) is to:
A. Meet the share availability needs of a potential merger.
B. Reduce the idle cash and increase marketable securities.
C. Lower the debt to equity ratio of the entity.
D. Increase the entity's total assets.
Answer: A
Explanation:
An entity has many reasons to repurchase its own shares. These include meeting the needs created by potential mergers or pension and profit-sharing plans. Also, management may want to buy out a dissident shareholder. Sometimes, an entity has excess cash and can find no better investment than its own shares. Moreover, management may believe the shares are selling for a low price for no apparent reason. Thus, a purchase may not only be a good investment but may also support the market price of the shares.

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