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The key difference is Hertz created the five shares out of thin air. So Alice now has a diluted position.
by gpapilion 6y ago
The key difference is Hertz created the five shares out of thin air. So Alice now has a diluted position.
- vkou 6y agoA diluted position in a firm that is now more valuable, because it is less likely to be completely eaten by creditors, who will leave the shareholders nothing. If this were a problem, then companies would not be allowed to dilute shares. They are, though. Would you rather own all the shares of a worthless company, or some of the shares of a company with a value > 0?