Dilution is
A) the short-term impact of a new issuance upon earnings per share.
B) the result of underwriting expenses.
C) generally acceptable by corporations and investors since it should be overcome with time.
D) two of the options are true.

Question

Quizplus · Accepted Answer

Dilution refers to the decrease in existing shareholders' ownership percentage due to the issuance of new shares, which can impact earnings per share in the short term. It is often accepted by corporations and investors with the expectation that the benefits of raising additional capital will outweigh the temporary negative effects of dilution.

Dilution Is