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Is buyback good for investors?

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In most cases, a buyback is good for investors as companies repurchase the shares at a price slightly higher than the market price.

Shareholders benefit from the buyback in the following ways:

  • They get a higher value or incentive for the shares.
  • The capital gains earned in buyback are tax-exempt.
  • Their available liquidity goes up.
  • The prices of remaining shares usually go high as the investor confidence is boosted and the number of shares available for trade is reduced.

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