Before a seasoned stock offering,you owned 7,500 shares of a firm that had 500,000 shares outstanding.After the seasoned offering,you still owned 7,500 shares but the number of shares outstanding rose to 625,000.Which one of the following terms best describes this situation?

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Quizplus · Accepted Answer

Percentage ownership dilution occurs when a company issues more shares, causing existing shareholders' ownership percentage to decrease. In this case, the number of shares outstanding increased from 500,000 to 625,000, causing dilution of existing shareholders' ownership.

Before a Seasoned Stock Offering,you Owned 7,500 Shares of a Firm