The Right for Existing Owners to Maintain Their Ownership Share

question 54

Multiple Choice

The right for existing owners to maintain their ownership share by purchasing sufficient shares to keep their percentage share of the firm is called:

• A)a stock option
• B)a stock warrant
• C)preemptive rights
• D)participating stock

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash and goods, used to generate wealth through investment.

Labor

Labor refers to the human effort, both physical and mental, used to produce goods and services.

Close Substitutes

Goods or services that can be used in place of each other with relative ease by consumers, based on similar features, functions, or effects.

Elastic

In economics, elasticity refers to the degree to which demand or supply responds to changes in price. High elasticity means a significant change in quantity with a small change in price.