Which One of the Following Statements Concerning Dilution Is Correct

question 44

Multiple Choice

Which one of the following statements concerning dilution is correct?

• A)Dilution of percentage ownership occurs whenever an investor 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:

Substitution

The economic concept where consumers replace more expensive items with less costly alternatives, influencing demand and market dynamics.

Indifference Curve

A graphical representation in economics showing different bundles of goods between which a consumer is indifferent, implying no preference for one combination over the other.

Beyoncé

A highly influential American singer, songwriter, and actress known for her powerful vocals, stage performances, and role in promoting various socio-cultural causes.

Indifference Curve

An indifference curve represents combinations of goods among which a consumer is indifferent, showing the same level of satisfaction.