Capital Gains and Dividend Tax Treatment Name: Institution: Question 1 When the companies buy back the share from the market, they have two ideas in mind, to increase their value as well as reduce the risk that is associated with the stakeholders that would want to have the controlling stake in the company (HYPERLINK "http://smallivy.wordpress.com/author/smallivy/" o "View all posts by smallivy"smallivy, 2012). This is because, by buying back the shares, the will reduce the availability of their shares in the market (supply). One of the effects of the repurchase is as the firms intend, a raise in the value of the shares. This therefore means that the investors are bound to be making capital gains (Defend My Dividend, 2010). If this increase in value takes place the shareholders also stand to benefit from the prime chance of deferring the capital gains. On the negative the buyback can be used to manipu...