The Most Important Feature of the Preemptive Right Is That

question 12

Multiple Choice

The most important feature of the preemptive right is that the rights

• A)may be sold for profit.
• B)afford stockholders possible protection against dilution.
• C)may be cumulatively voted.
• D)are nontransferable.

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Definitions:

Solvency

The ability of an entity to meet its long-term financial obligations and continue its operations in the long term.

Current Ratio

A financial metric that evaluates a firm's capability to settle short-term liabilities using its available assets.

Profitability

Profitability measures a company's ability to generate earnings as compared to its expenses and other costs incurred during a specific period.

Return on Common Shareholders' Equity Ratio

A measure of profitability that calculates how much profit a company generates with the money shareholders have invested, focusing on common shareholders.