The Purpose of PPre-Emptive Rights Is to Allow Shareholders To

question 151

Multiple Choice

The purpose of pPre-emptive rights is to allow shareholders to:

• A)buy enough of a new securities offering to maintain their present proportional share of ownership
• B)buy an unlimited amount of the new issue at a discount
• C)pre-empt other stockholders from selling securities in a company
• D)none of the above

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Definitions:

Initial Margin

The minimum amount of capital required to open a new position in the market, designed as a security for the broker against potential losses.

Actual Margin

The real profit margin achieved after accounting for all costs and expenses, reflecting the actual financial health and profitability.

Initial Margin

The minimum amount of capital required to be deposited in a margin account before trading on margin or selling short.

Underwriting Arrangement

The process by which an underwriter brings a new security issue to the public, often assuming the risk of selling the securities.