If you own 200,000 shares of stock in a company with 8 million shares outstanding and the company issues an additional 2 million shares to its employees through a stock purchase plan,your ownership percentage:
A)remains the same because the company now has more assets.
B)falls from 2.5% to 2%.
C)remains the same because the company now has fewer liabilities.
D)increases because the company now has more stock outstanding.

Question

Quizplus · Accepted Answer

Prior to this issuance,an investor with 200,000 of the 8 million shares outstanding has an ownership percentage of 2.5% (or 200,000 ÷ 8,000,000).After the issuance,an investor with 200,000 of the 10 million shares outstanding has an ownership percentage of only 2% (or 200,000 ÷ 10,000,000).

If You Own 200,000 Shares of Stock in a Company