Accelerated Share Repurchase
(ASR)

In an attempt to boost a company's stock price, corporations either reduce the number of shares scattered in the open market by buying it back to hold it or destroy it. Companies can execute this through an investment bank by means of accelerated share repurchase. The invesment bank agrees to sell shares of a company's own stock back to the company by borrowing shares from its clients. However this is returned by buying back the stock in the market and finally returning it to its rightful owner. To reduce the risk of the stock surging up in price due to the buyback, companies aquires its stock back at a higher price than that of the current market price or at a premium.

Stocks | Forex | Options | Economics | Bonds | History | Language learning | Technology | Technical Analysis | Fundamental Analysis
Copyright © 2014 econtrader | Risk disclosure | Terms of Use