What are accretion and dilution?

Accretion is the growth of assets and earnings of a business. Accretion is also defined as the accumulation of capital gains that an investor expects to get after purchasing a bond at a discount. The rate of accretion is found by dividing the discount by the number of years in the term. When stockholder’s ownership of the percentage of the company decreases as the company issues new stock, this results in dilution.

Dilution shifts the fundamental positions of the stock such as the ownership percentage, voting control, earnings per share, and the value of individual shares.