What happens to treasury stock after reacquisition?

The correct understanding regarding treasury stock after reacquisition is that it can be re-sold. When a corporation repurchases its own shares from the marketplace, those shares become treasury stock, which is a form of the company's own equity.

Once treasury stock is acquired, the company has several options regarding how to manage those shares. One of the most common practices is to re-sell the treasury stock to investors or to reissue the shares to raise additional capital. This flexibility allows the corporation to adjust its capital structure as needed or return value to shareholders through stock buyback programs.

In contrast, the option that mandates cancellation of treasury stock does not apply because companies can choose to keep the stock in treasury or to sell it again rather than automatically canceling it. Additionally, while deciding outcomes for treasury stock, the idea that it must be held indefinitely is incorrect; companies can hold it for a time but are not bound to keep it forever. Lastly, treasury stock absolutely can be reintegrated into the market, countering the notion that it cannot circulate again.