The pre-emptive right of a common stockholder is the right to
A) share proportionately in corporate assets upon liquidation.
B) share proportionately in any new issues of stock of the same class.
C) receive cash dividends before they are distributed to preferred stockholders.
D) exclude preferred stockholders from voting rights.

Question

Quizplus · Accepted Answer

The pre-emptive right of a common stockholder is the right to maintain their proportionate ownership in the company by purchasing a proportionate number of new shares issued by the company. This right allows them to protect their ownership percentage from being diluted by the issuance of new shares to other investors. Options A and C refer to the rights of preferred stockholders, and option D is not a correct statement.

The Pre-Emptive Right of a Common Stockholder Is the Right