Before a seasoned stock offering, you owned 500 shares of a Vancouver ﬁrm that had 120,000 shares outstanding. After the seasoned offering, you still owned 500 shares but the number of
Shares outstanding rose to 135,000. This is an example of _____ dilution.

Question

Quizplus · Accepted Answer

The increase in the number of shares outstanding means that the ownership percentage of each shareholder decreases, resulting in dilution of their ownership. Market value, earnings per share, book value, and equity may also be affected by the offering, but the primary issue here is the dilution of ownership.

Before a Seasoned Stock Offering, You Owned 500 Shares of a Vancouver