Which of the following statements are true in the context of dilution of equity shares?

The correct answer is D. Dilution is the result of an increase in the total number of equity shares.

Dilution is a decrease in the ownership percentage of existing shareholders due to the issuance of new shares. It can occur when a company issues new shares to raise capital, or when it acquires another company with a large number of shares outstanding.

Dilution can have a negative impact on existing shareholders in several ways. First, it can reduce their ownership percentage in the company. This can make it more difficult for them to influence corporate decisions, and it can also reduce the value of their shares. Second, dilution can increase the number of shares outstanding, which can dilute earnings per share. This can make the company’s stock less attractive to investors, and it can also make it more difficult for the company to raise capital in the future.

There are a few ways to prevent dilution. One way is to issue new shares only when absolutely necessary. Another way is to use debt financing instead of equity financing. Finally, companies can repurchase shares to reduce the number of shares outstanding.

Here is a brief explanation of each option:

• A. Dilution is a reduction in loss per share. This is not true. Dilution can lead to a reduction in earnings per share, but it does not necessarily lead to a reduction in loss per share.
• B. Dilution is an estimation of the future growth of share price. This is not true. Dilution is a change in the ownership percentage of existing shareholders due to the issuance of new shares. It is not an estimation of the future growth of share price.
• C. Dilution is stagnation of the future share price. This is not true. Dilution can lead to a decrease in the future share price, but it does not necessarily lead to stagnation.
• D. Dilution is the result of an increase in the total number of equity shares. This is true. Dilution is a change in the ownership percentage of existing shareholders due to the issuance of new shares. It is the result of an increase in the total number of equity shares.