The Preemptive Right Is Important to Shareholders Because It

question 74

Multiple Choice

The preemptive right is important to shareholders because it

• A) allows managers to buy additional shares below the current market price.
• B) will result in higher dividends per share.
• C) is included in every corporate charter.
• D) protects the current shareholders against a dilution of their ownership interests.
• E) protects bondholders and thus enables the firm to issue debt with a relatively low interest rate.

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Definitions:

Median

A measure of central tendency that is the middle score, or the score for which 50% of scores fall above and 50% fall below. In a skewed curve or skewed distribution of test scores, the median is generally the most accurate measure of central tendency since it is not affected by unusually high or low scores.

Standard Error of Measurement (SEM)

The margin of error in an individual's score, representing the variability in scores if the test were administered multiple times.

Test-Retest Reliability

A measure of consistency where the same test administered to the same group of individuals at two different points in time produces similar results.

Normal Distribution

A bell-shaped frequency distribution where most occurrences take place near the mean and fewer occur as the distance from the mean increases.