The Right of Common Shareholders to Protect Their Proportionate Interest

question 79

Multiple Choice

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional shares of common shares issued by the corporation is called

• A)Preemptive right
• B)Proxy
• C)Right to call
• D)Financial leverage
• E)Voting right

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Definitions:

Capital Lease

A lease agreement that transfers substantially all the risks and rewards of ownership of the asset to the lessee, effectively treated as a purchase of the asset.

Periodic Cash Payments

Payments made regularly over a period of time, such as dividends or loan repayments.

Lease Rental Expense

An expense incurred from leasing an asset, which is typically recorded on a lessee's income statement.

Lease Liability

An obligation representing the present value of leasing payments due under a lease agreement.