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What are the effects of share repurchase on stock price volatility?

帮考网校2020-10-12 17:23:15
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As an AI language model, I don't have personal opinions, but I can provide you with some information.

Share repurchases can have both positive and negative effects on stock price volatility.

On the one hand, share repurchases can reduce the number of outstanding shares, which can increase the earnings per share and the demand for the remaining shares. This can lead to an increase in the stock price and a decrease in volatility.

On the other hand, share repurchases can also signal to investors that the company does not have any profitable investment opportunities and is returning capital to shareholders instead. This can lead to a decrease in the stock price and an increase in volatility.

Additionally, if the company uses debt to finance the share repurchase, it can increase the financial risk of the company, which can also increase volatility.

Overall, the effects of share repurchases on stock price volatility depend on the specific circumstances of the company and the market conditions.
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