Which of the Following Statements Is CORRECT

question 59

Multiple Choice

Which of the following statements is CORRECT?

• A) the preemptive right gives stockholders the right to approve or disapprove of a merger between their company and some other company.
• B) the preemptive right is a provision in the corporate charter that gives common stockholders the right to purchase (on a pro rata basis) new issues of the firm's common stock.
• C) the free cash flow valuation model, vops =fcf1/(wacc σ g), cannot be used for firms that have negative growth rates.
• D) the free cash flow valuation model, vops = fcf1/(wacc σ g), can be used only for firms whose growth rates exceed their wacc.
• E) if a company has two classes of common stock, class a and class b, the stocks may pay different dividends, but under all state charters the two classes must have the same voting rights.

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Definitions:

Double-Entry Bookkeeping System

An accounting method where each transaction is recorded in two accounts, showing both the source and the destination of funds to ensure accuracy.

Single-Entry System

A method of bookkeeping where each financial transaction is recorded only once, either as an income or an expense, making it less complex but less accurate than double-entry systems.

Account Calculations

The process of determining financial figures related to accounts, including balances, charges, and payments.

Greater Accuracy

Refers to a higher degree of precision or correctness in measurements, actions, or statements.