Dilution
A)is the result of the decrease in the percentage ownership of the existing shareholders.
B)can be positive or negative.
C)is equal to the net issuing announcement drop as a percent of the new equity raised.
D)both B and C.

Question

Quizplus · Accepted Answer

Dilution can be positive or negative depending on the impact it has on the value of the shares. It is also equal to the net issuing announcement drop as a percentage of the new equity raised, meaning that the total percentage ownership of the existing shareholders decreases. Therefore, both options B and C are correct. Choice A is incorrect as it only explains one aspect of dilution. Dilution can be either positive (increasing the number of shares and potentially increasing the value of the company) or negative (decreasing the percentage ownership of existing shareholders). The degree of dilution is equal to the net issuing announcement drop as a percent of the new equity raised. Therefore, both statements B and C are true.