Dilution of earnings occurs because
A)a new issue of common stock creates more shares outstanding, which often reduces earnings per share temporarily.
B)the company suffers a decline in earnings after taxes.
C)the investment banker collects an underwriting fee.
D)All of these options

Question

Quizplus · Accepted Answer

Dilution of earnings occurs because a new issue of common stock creates more shares outstanding, which often reduces earnings per share temporarily. The other options (B and C) are not accurate explanations for the concept of dilution of earnings.

Dilution of Earnings Occurs Because