The pre-emptive right enables a stockholder to
A) receive the same amount of dividends on a percentage basis as the preferred stockholders.
B) receive cash dividends before other classes of stock without the pre-emptive right.
C) sell capital stock back to the corporation at the option of the stockholder.
D) none of these answers are correct.

Question

Quizplus · Accepted Answer

The pre-emptive right allows existing shareholders the opportunity to buy additional shares before the company offers them to the public, to maintain their proportional ownership. None of the options provided describe this right accurately.

The Pre-Emptive Right Enables a Stockholder to