The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:
A)Preemptive right.
B)Proxy right.
C)Right to call.
D)Financial leverage.
E)Voting right.

Question

Quizplus · Accepted Answer

The right described in the question is called a preemptive right. This right allows common shareholders to maintain their proportionate ownership in the corporation by having the first option to purchase additional shares of common stock if the company decides to issue more shares. The other answer choices do not accurately describe this right.

The Right of Common Shareholders to Protect Their Proportionate Interest