In general, issuing equity may not dilute the ownership of existing shareholders if ________.
A) the value of new shares is equal to the value of debt
B) the new shares are sold at a fair price
C) the firm has no debt financing
D) the firm uses debt conservatively

Question

Quizplus · Accepted Answer

Issuing equity may not dilute the ownership of existing shareholders if the new shares are sold at a fair price. This means that the price of the new shares should be based on the current market value of the company and not significantly higher. If the new shares are sold at a fair price, the percentage ownership of the existing shareholders will remain the same despite the issuance of new shares.

In General, Issuing Equity May Not Dilute the Ownership of Existing