When a Firm Issues New Stock, It Can Result in a Dilution

question 9

True/False

When a firm issues new stock, it can result in a dilution of earnings in the short run.
When dilution occurs because of a new issue, it typically takes time for the new equity infusion to boost earnings per share, but this condition is temporary in most cases.

---

Definitions:

Avoidable Costs

Expenses that can be eliminated if a particular decision is made or if a business operation is discontinued.

Future Costs

Costs that have not yet been incurred but are expected to be spent in the future for operational or investment purposes.

Alternatives

Different options or strategies available for consideration in decision-making processes.

Original Cost

Original Cost refers to the initial monetary value spent to acquire an asset, including purchase price and any other associated costs necessary to get the asset ready for use.