Treasury Stock

C

The correct answer is C. Treasury stock refers to common stock that has been issued by a company and subsequently repurchased by that same company. The shares are then held in the company's treasury, which is why they are referred to as treasury stock.

When a company repurchases its own shares, it may do so for a variety of reasons. For example, it may believe that its shares are undervalued and want to take advantage of this by repurchasing them. It may also want to use its excess cash to boost earnings per share, or to reduce the number of shares outstanding and thereby increase the percentage ownership of remaining shareholders. In some cases, a company may also repurchase shares in order to prevent a hostile takeover by reducing the number of outstanding shares available for purchase by a potential acquirer.

Treasury stock has some unique characteristics. For example, it does not receive dividends, and it does not have any voting rights. When a company decides to repurchase its own shares, it typically does so on the open market, just like any other investor. However, the company may also choose to repurchase shares directly from existing shareholders through a tender offer.

In summary, treasury stock is common stock that has been repurchased by a company and is held in its treasury. It is not outstanding, does not receive dividends, and does not have voting rights. Companies may repurchase their own shares for a variety of reasons, including to take advantage of undervaluation, boost earnings per share, or prevent a hostile takeover.