Technical question about treasury shares
Hi all,
I recently had an interview and received some questions I didn't answer clearly. Can you guys help me out?
So this was the question:
1. When calculating equity value why are treasury shares excluded?
2. Let's say firm A has 9 common stock and 1 treasury stock and firm B has 1 common stock and 9 treasury stock. Considering other things are equal and they all have same share price, do two firms have same value?
Have a good day
1) bc their shares bought back by company therefore are not shares outstanding so equity value would decrease
2) 9 shares ourstandinfb
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