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What is treasury stock?

Friday 15th March 2002

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Q: I notice that when a company buys back its own shares, these are held as "treasury stock". What does this mean? (especially in relation to dividends,EPS calculations, etc).

A: Treasury stock is issued shares in the company that the company has reacquired (usually by a buyback). No dividends are paid on treasury stock as these shares are being held by
the company. Unless the shares are cancelled by the directors then they can still be included when calculating earnings per share.

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