Which One of the Following Statements Is Correct Concerning Dilution

question 156

Multiple Choice

Which one of the following statements is correct concerning dilution related to a new project?

• A) As long as the book value of a firm increases when a project is undertaken, the book value per share will remain constant.
• B) As long as the market value of a firm increases when a project is undertaken, the market value per share will increase.
• C) Even if the market value of a firm increases when a project is undertaken, the market value per share can decrease.
• D) The proportionate ownership of each shareholder always remains constant when new projects are taken on.
• E) The market price per share of stock tends to increase when the net present value of a project that is taken on is negative.

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Definitions:

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