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In a follow-on offering by an already-public company, additional new shares are sold to the public. What effect does this typically have on existing shareholders?
a.It guarantees a higher dividend
b.It converts their common stock into preferred stock
c.It has no effect on their ownership percentage
d.It can dilute their proportional ownership in the company
Giải thích
When a public company issues additional new shares in a follow-on (primary) offering, the total share count rises and existing shareholders' proportional ownership can be diluted. Dilution is a common concern investors weigh when a company raises additional equity capital.
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Câu hỏi liên quan cùng chủ đề
- The broker-dealer that organizes an underwriting syndicate, negotiates with the issuer, and coordinates the offering is known as the:
- How does a selling group member differ from a syndicate member in an underwriting?
- The underwriting spread in a securities offering is best defined as:
- An offering in which some shares are newly issued by the company and other shares are sold by existing large shareholders is called a(n):
- The period after a registration statement is filed but before it becomes effective, during which no sales may be finalized, is called the:
- Which type of offering allows a company to raise capital by selling securities privately to accredited and a limited number of non-accredited investors without full SEC registration?
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