What is treasury stock?

Treasury stock refers to shares that a company has repurchased from its shareholders and is held in the company's own treasury. These shares were once outstanding and part of the total shares issued but are now not considered when calculating dividends or votes. When a company buys back its shares, it can reduce the number of shares in circulation, potentially increasing earnings per share (EPS) and benefiting remaining shareholders. Treasury stock represents a way for a company to invest in itself, manage its capital structure, or return value to shareholders under certain strategies.

The other options do not accurately describe treasury stock; the shares issued at a premium by the government are related to the initial offering, not buybacks. Securities held by investors in the secondary market do not pertain to treasury stock, as these refer to trades made between investors. Lastly, newly issued shares refer to stock that has just been created and sold to investors, which is also distinct from treasury stock.