A share buyback programme effectivelyDecreases the P/E ratioNone of the choicesDecreases the EPSIncreases the share price

To analyze the effect of a share buyback program on various financial metrics, let's break down the choices presented in the question:

1. Understanding Share Buybacks: A share buyback (or repurchase) occurs when a company buys its own shares from the marketplace. This can lead to various impacts on the company's financials.

2. Impact on Earnings Per Share (EPS):

   • When a company repurchases its shares, the number of outstanding shares declines. Since EPS is calculated as: $\text{EPS} = \frac{\text{Net Income}}{\text{Outstanding Shares}}$
   • With fewer shares, the EPS typically increases if net income remains constant.

3. Impact on Price-to-Earnings (P/E) Ratio:

   • The P/E ratio is given by: $\text{P/E Ratio} = \frac{\text{Market Price per Share}}{\text{EPS}}$
   • If EPS increases due to a buyback, the P/E ratio might decrease if the market price does not rise proportionately.

4. Impact on Share Price:

   • While share buybacks can signal to the market that the company believes its shares are undervalued, often they can create upward pressure on the share price due to reduced supply.

Final Answer

Based on the analysis, the most accurate option is: Increases the share price. However, it is also true that share buybacks can lead to a decrease in the P/E ratio. Therefore, the correct option may depend on the specific context of the question. If only one choice must be selected, "Increases the share price" is more directly aligned with the typical outcomes of share buybacks.