Which of the Following Statements Is CORRECT

question 87

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 stock valuation model, P₀ = D₁/(r_s − g), cannot be used for firms that have negative growth rates.
• D) The stock valuation model, P₀ = D₁/(r_s − g), can be used only for firms whose growth rates exceed their required returns.
• 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.

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Definitions:

Spearman's Concept of G

A theory proposed by psychologist Charles Spearman that suggests the existence of a general intelligence factor (g) which underlies individual cognitive abilities.

Binet

Alfred Binet was a French psychologist instrumental in developing one of the first intelligence tests, the Binet-Simon test.

IQ

An abbreviation for Intelligence Quotient, a psychological measure of a person's relative cognitive abilities as compared to the population.

Reliability

The degree of consistency with which a test measures a trait or attribute.