Dilution

dilution A subject that comes up quite a bit in discussions involving the selling of securities is

Loss in existing dilution. Dilution refers to a loss in existing shareholders' value. There are several kinds: shareholders' value, in terms of either ownership, market value, _

book value, or EPS. 9Robert S. Hansen, "The Demise of the Rights Issue," Review of Financial Studies 1 (Fall 1988), pp. 289-309.

Ross et al.: Fundamentals VI. Cost of Capital and 16. Raising Capital of Corporate Finance, Sixth Long-Term Financial Edition, Alternate Edition Policy

CHAPTER 16 Raising Capital 555

1. Dilution of percentage ownership

2. Dilution of market value

3. Dilution of book value and earnings per share

The differences between these three types can be a little confusing, and there are some common misconceptions about dilution, so we discuss it in this section.

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