The problem of dilution of stockholders' earnings never results from the sale of call options, but it can arise if warrants are used.

Name: The problem of dilution of stockholders' earnings never results from the sale of call options, but it can arise if warrants are used.
Brand: Quizplus
Rating: 4.9 (64 reviews)

Question

Quizplus · Accepted Answer

Warrants, when exercised, result in the issuance of new shares, which can dilute existing shareholders' earnings. Call options, however, do not involve issuing new shares by the company.

The Problem of Dilution of Stockholders' Earnings Never Results from the Sale