State law provides that existing shareholders may buy new issues of stock in the same proportion as their current holdings.This is done to allow current stockholders to keep the same voting and dividend rights they had before the new stock issue.This right is known as the right of:

Question

Quizplus · Accepted Answer

Preemption means the right to purchase additional shares in proportion to the existing holdings of a shareholder. This right allows shareholders to maintain their ownership percentage, voting rights, and dividends in the company. It also ensures that new shareholders cannot dilute the ownership of existing shareholders by buying a larger portion of the newly issued stocks. Therefore, C is the correct choice.

State Law Provides That Existing Shareholders May Buy New Issues