An Increase in the Number of Shares of Common Stock

question 322

True/False

An increase in the number of shares of common stock outstanding will increase a company's price-earnings ratio if the market price per share remains unchanged.

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Definitions:

Stock Options

A type of compensation provided by companies to employees in the form of equity, giving the employee the right to buy shares at a set price.

Exercise Price

The predetermined price at which the holder of an option can buy or sell the underlying asset.

Market Price

The prevailing market rate at which a service or asset is available for purchase or sale.

Balanced Scorecard

A strategic planning and management system used by organizations to translate mission and vision statements into operational objectives and performance metrics across four perspectives: financial, customer, internal processes, and learning and growth.