Did you ever hear about such term as stock dilution and its importance for the investors? The moment when the company issues additional shares and consequently the shareholders own less percentage in the firm takes place. Stock dilution definition is very easy to remember: the total amount of shares goes up (or the ownership of the shareholder goes down). In order to comprehend the issue under analysis during investigation of the newly issued shares, merger, buyout or the stock compensation program, it is necessary to understand what stock dilution is. Although dilution results in reducing ownership, the companies can benefit from it by raising capital.
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