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A stock buyback, or repurchase, occurs when a company buys its own shares off the market and therefore reduces the amount of stock outstanding.

It can do this in one of two ways: The company can either buy shares at current market prices or tender a fixed-price offer to current shareholders.

The primary benefit of a buyback is the price appreciation investors usually see after the transaction. When the supply of stock available to the general market suddenly becomes smaller, each share is worth more.

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