Treasury stock

Okay kiddo, so let me tell you about this thing called "treasury stock".

Imagine you have a big bag of candy. This bag represents all the shares of a company that are available to be owned by people. But sometimes, the company might decide to buy some of those shares back, like taking some candy out of the bag, and keep them for themselves. These shares that the company takes back are called "treasury stock".

Now, you might be wondering why a company would do this. Well, there are a few reasons.

Firstly, if a company has a lot of cash but doesn't have any good opportunities to invest it in their business, they might decide to buy back their own shares as a way of "investing" in themselves. It's like using the candy they already have to make their bag of candy even better.

Another reason a company might buy back their own shares is if they think those shares are undervalued. This means that they think their company is worth more than what the public thinks, and so buying back their shares makes them more valuable in the long run.

Lastly, having treasury stock can also help a company defend against hostile takeovers. This is when another company tries to buy a lot of shares in their company and take over control. By owning their own shares, the company can make it harder for someone else to buy enough shares to gain control.

So there you have it - treasury stock is when a company buys back some of their own shares and keeps them for themselves. It can help them invest in their business, make their shares more valuable, and protect against hostile takeovers.