The Preemptive Right Is Important to Shareholders Because It

question 39

Multiple Choice

The preemptive right is important to shareholders because it

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

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Definitions:

Cultural Practices

The shared activities, rituals, and norms that define the lifestyle of a particular group or society.

Biological Evolution

The process by which species of organisms undergo change over time through genetic variation and natural selection, leading to the emergence of new species.

Punctuated Equilibria

A model of macroevolutionary change that suggests evolution occurs via long periods of stability or stasis punctuated by periods of rapid change.

Darwinian Gradualism

The theory proposed by Charles Darwin that evolution occurs through the gradual accumulation of small genetic changes over time.