Dilution

question 50

Multiple Choice

Dilution

• A)is the result of the decrease in the percentage ownership of the existing shareholders.
• B)can be positive or negative.
• C)is equal to the net issuing announcement drop as a percent of the new equity raised.
• D)both B and C.

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Definitions:

New Capital

Funds or assets newly invested for the purpose of generating additional income or growth.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or offer a service at a lower opportunity cost than competitors.

Capital

Resources made and used by people to produce and distribute goods and services, including buildings, machinery, tools, and equipment.