Which of the Following Statements Is CORRECT

question 52

Multiple Choice

Which of the following statements is CORRECT?

• A) The preemptive right gives stockholders the right to approve or disapprove of a merger between their company and some other company.
• B) The preemptive right is a provision in the corporate charter that gives common stockholders the right to purchase (on a pro rata basis) new issues of the firm's common stock.
• C) The free cash flow valuation model, V_ops =FCF₁/(WACC − g), cannot be used for firms that have negative growth rates.
• D) The free cash flow valuation model, V_ops = FCF₁/(WACC − g), can be used only for firms whose growth rates exceed their WACC.
• E) If a company has two classes of common stock, Class A and Class B, the stocks may pay different dividends, but under all state charters the two classes must have the same voting rights.

---

Definitions:

Production Manager

A professional responsible for overseeing the production process, ensuring efficiency, meeting production targets, and maintaining quality standards.

Purchasing Agent

An individual or company responsible for buying goods and services for another company or organization.

Fixed Overhead Volume Variance

Fixed overhead volume variance is the difference between the budgeted and actual volume of production, multiplied by the fixed overhead rate, indicating efficiency in production volume.

Predetermined Fixed Overhead Rate

A rate used to allocate fixed overhead costs to produced goods, based on estimated costs and activity levels.