The purpose of pre-emptive rights is to allow shareholders to:
A) buy enough of a new securities offering to maintain their present proportional share of ownership
B) buy an unlimited amount of the new issue at a discount
C) pre-empt other stockholders from selling securities in a company
D) require the issuing company to also sell them bonds

Question

Quizplus · Accepted Answer

Pre-emptive rights allow existing shareholders to purchase new securities offerings in order to maintain their proportional ownership in the company. This means that shareholders have the right to purchase a certain number of shares of the new issuance at the same price as the offering to ensure that they are not diluted in their ownership percentage of the company.

The Purpose of Pre-Emptive Rights Is to Allow Shareholders To