The Preemptive Right Enables a Shareholder to

question 6

Multiple Choice

The preemptive right enables a shareholder to

• A)share proportionately in any new issues of shares in the same class.
• B)receive cash dividends before other classes of shares without the preemptive right.
• C)sell shares back to the corporation at the option of the shareholder.
• D)receive the same amount of dividends on a percentage basis as the preferred
• Shareholders.

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Definitions:

Negotiable Instrument

A written promise to pay a specified sum of money, payable either on demand or at a specific future date, with the document listing the name of the person who will make the payment.

Unconditional Promise

A commitment or guarantee without any stipulations or requirements that the promisor must fulfill.

Agreement

A mutual understanding or arrangement between two or more parties, often formalized by a contract.

Contractual Intent

The intention of parties to enter into a legally binding agreement, demonstrated by their words, actions, and circumstances surrounding the agreement.