Diana owns 15 percent of the existing shares of stock in Cobalt Corp. The corporation is presently issuing new stock, and Diana buys 15 percent of the new shares to maintain her share of ownership in the company. By doing so, Diana is exercising the _____ of common stockholders.

Question

Quizplus · Accepted Answer

Preemptive right is the right of common stockholders to maintain their proportionate ownership stake in a company by having the first right to buy new shares before they are offered to the public. By buying 15 percent of the new shares, Diana is exercising her preemptive right.

Diana Owns 15 Percent of the Existing Shares of Stock