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The ZZT Company went public on June 1, 1999, by issuing 25 million shares of common stock. In 2 000, the firm raised additional capital by issuing 2 million shares of preferred stock. What is the weighted average number of common shares outstanding for the year ending December 31, 2000?
Correct Answer: C
The weighted average number of common shares outstanding is the number of shares outstanding during the year weighted by the portion of the year they were outstanding. Since no new common shares were issued in 2000, and there were 25 million shares at the end of 1999, there are 25 million shares at the end of 2000. Note that the preferred stock shares do not affect the common shares outstanding.