The Most Important Feature of the Preemptive Right Is That

question 87

Multiple Choice

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

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

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by its issuer.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, typically with dividends that must be paid out before dividends to common stockholders.

Par Value

A nominal or face value assigned to a share of stock by the company's charter, which may not reflect the actual market value.

Paid-In Capital

Funds raised by a company from selling its shares to investors, beyond the nominal value of the shares.