Asked by
Scott Fergy
on Nov 06, 2024Verified
The right of common stockholders to have the opportunity to purchase new shares of stock is called a:
A) first offer right.
B) preemptive right.
C) stock-split right.
D) profit-sharing right.
E) cooperative right.
Preemptive Right
The right granted to existing shareholders to purchase additional shares before the company offers them to the public, to maintain their proportional ownership.
Stock-split Right
The entitlement of a shareholder to receive additional shares when a company decides to divide its existing shares into multiple ones to boost liquidity.
- Recognize the concept and importance of preemptive rights for stockholders.
Verified Answer
WN
Learning Objectives
- Recognize the concept and importance of preemptive rights for stockholders.