Which of the following best describes a preemptive right?
A)It is the right to purchase additional stock on the stock exchange.
B)It is the right to sell existing shares back to the corporation.
C)It is the right to purchase shares before the incorporation of a company.
D)It is the right to purchase new capital stock in proportion to shares owned.

Question

Quizplus · Accepted Answer

A preemptive right allows existing shareholders the right to buy new shares of a company's stock before the company offers it to the public, in proportion to their current ownership. This helps them maintain their percentage of ownership and avoid dilution of their shares.

Which of the Following Best Describes a Preemptive Right