Question 5
2 pts
Which of these describes dilution for shareholders?
O When dividends are paid, there is less cash in the firm, reducing the value of the company and, therefore, the shares.
O When companies grow quickly, the value of the company increases, and so to does the value of the shares.
O When new shares are issued, the existing shareholders own a smaller percentage of the total number of shares outstanding.
O When a company becomes insolvent, the value of the shares becomes $0.