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:

Free-Rider Problem

A situation where individuals consume more than their fair share of a public resource, or shoulder less of the cost of its production, benefiting from a good without properly paying for it.

Street Performers

Individuals who entertain the public in outdoor locations, often relying on voluntary donations for income.

Median Voter

A theoretical concept that represents the individual whose preferences are exactly in the middle of the set of all voters' preferences, often used in political science to predict the outcome of elections.

Median-Voter Model

A theoretical model suggesting that the preferred policy of the median voter will win the support of a majority in a democratic election, shaping political outcomes.