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.

---

Definitions:

Undervalued Currencies

Currencies that are traded at a lower exchange rate than their perceived or actual economic value, often due to government intervention or market forces.

Domestic Manufacturing

The production of goods within a country's borders, focusing on local industries and labor forces rather than outsourcing.

Currency Valuation

The process of determining the value of one currency in terms of another, often influenced by market conditions, economic indicators, and governmental policies.

Textile-Producing

Involved in the manufacture of cloth or fabric materials, typically involving the spinning, weaving, or knitting of fibers.