What is treasury stock?

Treasury stock refers to shares of a corporation’s own stock that were previously issued to shareholders and then repurchased by the corporation itself. Once these shares are reacquired, they are held in the company’s treasury and are not considered when calculating earnings per share (EPS) or dividends. This stock may be held for various reasons, such as to reissue it for employee compensation plans, reduce the number of shares in circulation, or for various corporate financial strategies.

The other options do not accurately describe treasury stock. Newly issued stock that has yet to be sold relates to different aspects of stock issuance and does not capture the essence of treasury stock, which involves shares that have already been in circulation. Stock that cannot be traded is too vague and does not specifically address the nature of treasury stock, which can actually be reissued or retired. Finally, while treasury stock may have a par value, it is not always valued at par, as its market value can fluctuate based on various factors including market conditions and the corporation's financial health. Thus, defining treasury stock as shares that were previously issued and reacquired by the corporation captures its definition succinctly and accurately.