A stock buyback (share repurchase) can be viewed as:

A Always negative

B A tax-efficient alternative to dividends that returns cash to shareholders

C An expense

D Increasing shares outstanding

✓ Correct Answer: Option B

Buybacks reduce shares outstanding, increase EPS, and are often tax-advantaged compared to dividends (capital gains vs. ordinary income).

💡 Why is B) the correct answer?

The correct answer to the question "A stock buyback (share repurchase) can be viewed as:" is Option B: A tax-efficient alternative to dividends that returns cash to shareholders.

The other options — A) Always negative, C) An expense, D) Increasing shares outstanding — are incorrect for this CFA Exam Prep question. As explained above: Buybacks reduce shares outstanding, increase EPS, and are often tax-advantaged compared to dividends (capital gains vs. ordinary income).

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Corporate Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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A stock buyback (share repurchase) can be viewed as:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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