The Preemptive Right Gives Current Stockholders the Right to Purchase

question 65

True/False

The preemptive right gives current stockholders the right to purchase, on a pro rata basis, any new shares issued by the firm.This right helps protect current stockholders against both dilution of control and dilution of value.

---

Definitions:

Relevance

The quality of being closely connected or appropriate to the matter at hand.

Quality

An attribute or characteristic that determines the excellence, condition, or value of something, often measured against standards or requirements.

Citation

A reference or mention of a source, used to give credit to the original author or to support claims in a text.

Journal Article

A scholarly work published in an academic or professional journal, contributing to a particular field of study.