Series 7 Exam Question 165: Answer and Explanation

Question: 165

AylDec Corporation has been authorized to issue 20,000,000 shares of common stock. However, AylDec only issued 12,000,000 shares to the public. Six months later, AylDec repurchased 1,000,000 shares to increase the demand on their outstanding shares. How many shares of common stock does AylDec have outstanding?

• A. 11,000,000
• B. 12,000,000
• C. 13,000,000
• D. 20,000,000

Correct Answer: A

Explanation:

A. The easiest way to figure this one out is to use the following formula:

So, to determine how many shares are outstanding in the market, look at the amount of shares the company issued, which is 12,000,000, and subtract the amount of repurchased (treasury) stock. In this case, there are still 11,000,000 shares still outstanding.