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:

Satire

The use of irony, derision, or wit to expose folly or wickedness.

Irony

The use of words to convey a meaning that is the opposite of its literal meaning, often for humorous or emphatic effect.

Wit

A form of intelligent humor, the ability to say or write things that are clever and usually funny.

Child-directed Speech

The adjusted way of speaking that adults use when talking to young children, often involving simplified vocabulary, higher pitch, and exaggerated intonation.