SIE (Securities Industry Essentials) Practice Exam

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Which of the following statements is true about treasury stock?

It represents the shares available for public trading
It is preferred stock issued by the government
It constitutes a portion of shares not yet issued to the public
It is issued stock that has been subsequently reacquired by the corporation

The correct answer is: It is issued stock that has been subsequently reacquired by the corporation

Treasury stock refers to shares of a company's own stock that have been repurchased and are no longer in the hands of public shareholders. This option is correct because it correctly identifies the fact that treasury stock is previously issued stock that has been bought back by the company. Option A is incorrect because treasury stock is not available for public trading, it has already been repurchased by the company. Option B is incorrect because treasury stock is not preferred stock, it is common stock. Option C is incorrect because treasury stock is not a portion of shares that have not yet been issued, it is previously issued stock that has been bought back.