What is a stock buyback?

A stock buyback, often referred to as a share repurchase, involves a company purchasing its own shares from the marketplace. This action reduces the number of outstanding shares available, which can lead to an increase in the value of remaining shares due to the reduction in supply. By repurchasing shares, the company is essentially investing in itself, which can signal to investors that it has confidence in its prospects.

While other options may relate to aspects of stock market behavior or company strategies, the defining characteristic of a buyback is the act of a company buying back its own shares. This can be motivated by various reasons, including returning capital to shareholders, enhancing earnings per share by reducing share counts, or simply utilizing excess cash that can no longer be effectively reinvested in operations. Thus, option C accurately captures the essence of a stock buyback.