Which One of the Following Statements Concerning Dilution Is Correct

question 77

Multiple Choice

Which one of the following statements concerning dilution is correct?

• A) Dilution of percentage ownership occurs whenever an investor fully participates in a rights offer.
• B) Market value dilution increases as the net present value of a project increases.
• C) Market value dilution occurs when the net present value of a project is negative.
• D) Neither book value dilution nor market value dilution has any direct bearing on individual shareholders.
• E) Book value dilution is the cause of market value dilution.

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Definitions:

Soviet Union

A former federation of Communist republics that was established in 1922 and dissolved in 1991, consisting of Russia and several other countries in Eurasia.

Supply

The aggregate quantity of a product or service that can be bought at any specific price point within a particular market.

Price Signals

Indications to consumers and producers about the scarcity or abundance of a good or service, guiding their economic decisions.

Centrally Planned Economies

Economies where the government or central authority makes all the decisions about what goods and services are produced, how they are produced, and who gets them.