Dilution of Ownership Occurs When a New Stock Issue Results

question 64

True/False

Dilution of ownership occurs when a new stock issue results in each present stockholder having a larger number of shares and, thus, a claim to a larger part of the firm's earnings than previously.

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Definitions:

Optimal Order

The most efficient or cost-effective quantity of goods to order, taking into account factors such as demand, holding costs, and ordering costs.

Available Capacity

The amount of production capability or service availability that can be provided over a certain period of time.

Multiple Products

The strategy or situation of offering or managing a variety of different products instead of focusing on a single offering.

Postponement

A supply chain strategy that delays product customization or final assembly until customer orders are received, to reduce inventory costs and increase flexibility.