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Finance Dictionary and Glossary of Investment Terms
Diminution in the proportion of income to which each share is entitled.
A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities.
A watering down in the ownership stake represented by a single share of stock, usually as a result of the sale of additional shares. Dilution is bad news for investors; the company hasn''t gained any new assets or changed its market position, yet suddenly the pie has been divided into more -- and thus smaller -- pieces.