The Preemptive Right Is Important to Shareholders Because It

question 39

Multiple Choice

The preemptive right is important to shareholders because it

• A) will result in higher dividends per share.
• B) is included in every corporate charter.
• C) protects the current shareholders against a dilution of their ownership interests.
• D) protects bondholders, and thus enables the firm to issue debt with a relatively low interest rate.
• E) allows managers to buy additional shares below the current market price.

---

Definitions:

Sit-Ins

A form of protest in which participants occupy a place, refusing to leave until their demands are met.

Lunch Counters

Countertop spaces in diners or cafeterias where meals are served, historically significant in civil rights movements for sit-ins against racial segregation.

Rosa Parks

An African American civil rights activist, whose refusal to give up her bus seat in 1955 sparked the Montgomery Bus Boycott, a seminal event in the Civil Rights Movement.

Bus

A large motor vehicle designed to carry multiple passengers, commonly used for public transportation.