C8.6. Before it found the practice to be too expensive, Microsoft (anda number of other firms) wasin the habitof repurchasing someof the sharesthat it issued each year as employees exercised stock options. The rationale, according to commentators, wasto avoid the dilution fromsharesissued to employees.

a. Doshareissuesfrom the exercise of employee stockoptions causedilution?

b. Dosharerepurchases reverse dilution?

c. W'rrj would Microsoft feel that repurchasing sharesis "tooexpensive"?