John owns stock in GHWB Inc. GHWB Inc. is planning to issue 200,000 shares of common stock to finance a new factory in China. What type of risk does John face and how can he avoid it?

Select the best answer from the choices provided.

John faces inflation risk; he can sell his stock before the new shares are issued.

John faces inflation risk; he can sell his stock after the new shares are issued.

John faces share dilution risk; he can sell his stock before the new shares are issued.

John faces share dilution risk; he can sell his stock after the new shares are issued.

Question

John owns stock in GHWB Inc. GHWB Inc. is planning to issue 200,000 shares of common stock to finance a new factory in China. What type of risk does John face and how can he avoid it?

 

 
Select the best answer from the choices provided. 

John faces inflation risk; he can sell his stock before the new shares are issued. 

John faces inflation risk; he can sell his stock after the new shares are issued.

John faces share dilution risk; he can sell his stock before the new shares are issued.

John faces share dilution risk; he can sell his stock after the new shares are issued.